A Power of Attorney (POA) is anessential tool for your estate plans, and a mighty strong one at that. Ineffect, every adult should have one. Like most legal tools, the POA can betailored to fit nearly every need. In some ways it is like the Leatherman Multi-Tool, stron, durable, effective and powerful when used correctly. But much like the Leatherman a "cheap knockoff" POA can do more damage than good.
The broadest POA is the â€œGeneralDurable POA.â€ This gives the agent you appoint authority to do nearly everylegal and financial act you can do for yourself, even when you areincapacitated. That is broad authority. In the wrong hands, it can be more thandangerous. Think of it as â€œlegal dynamite.â€ In the right hands, it can be ablessing to you â€“ and your loved ones.
On the other hand, it ispossible to grant limited or specific POA authority. For example, you can limitthe duration the POA is effective and even the specific acts you authorize.This can provide a degree of safety when you donâ€™t want to grant open-endedauthority.
Practically speaking, seniorloved ones oftentimes have IRA accounts that need ongoing management and fromwhich minimum required distributions must be taken. If these loved ones become infirmor develop cognitive issues, then their IRA accounts will need to be managedand administered for them. The SlottReport explored this legal and financial fact of life in a recent articletitled â€œUsing a Power of Attorney for an IRA.â€One if the key take-a-ways from the article is that not all IRA custodians willtreat various POAs the same.
In addition to appointing theright agent for your POA and selecting the right type of POA, be sure toconfirm that your POA will be accepted by the third parties that will be askedto honor it. In this case, an ounce of prevention is worth more than a pound ofcure.
For more information on Powers of Attorney contact IdahoEstate Planning and schedule aconsultation. Remember,good planning is no accident.