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Estate planning is a complex task, requiring the advice of a qualified estate attorney. What is the wisest course of action in your situation?
You can hardly read a paper currently without coming across an article about the Brooke Astor case. Sadly, this case highlights what can go wrong when someone abuses the trust inherent in a power of attorney agreement. Although signing a power of attorney is critical to any comprehensive estate plan, it’s wise to put safeguards in place to reduce the risk of financial abuse.
A durable power of attorney allows you to appoint someone to make financial decisions for you in the event of your incapacitation or inability to make decisions for yourself. The word “durable” simply means that the powers granted in the document survive your future incapacity. Without a durable power of attorney, it’s much more difficult for your family to manage your finances in the event of your incapacitation, often requiring court supervision over months of wasted time.
While a durable power of attorney is intended to make things easier for your family if you become ill, it can quickly go awry if it’s written too broadly, without clear boundaries limiting the agent’s powers and responsibilities. Therefore, you must have 100 percent confidence in the person you name as your agent in order to protect your interests.
Some durable powers of attorney are “springing,” meaning they’re effective only if a certain condition is met (such as a doctor’s estimation that you are incapable of effectively managing your affairs). Other durable powers of attorney are “effective immediately,” which means they work without any certification and stay effective if incapacity happens later.
Under New York law, you can appoint more than one person to act as your agent under a durable power of attorney. If you appoint two people, then you must decide whether they may act separately or together.
Many estate planners believe it’s wisest to require the agents to act together, because both signatures are then required for any action on your behalf. Although this adds an extra layer of protection, it also makes the job of your agents more cumbersome, as routine procedures now require two signatures.
Alternatively, you may require the agent(s) to provide regular accountings to other family members or to a third party, such as a lawyer or an accountant. In many cases, this third party is given the power to replace the agent if the agent is not properly doing his job.
A durable power of attorney is a valuable estate planning tool, not merely a boilerplate form document. When drafted and used properly, it can make things easier for your family in your illness. It is imperative that you carefully consider all the relevant issues when going through this process with your professional advisors.
To learn more about New York elder law, New York Estate Planning, NY Elder, and New York Special Needs Planning, visit LittmanKrooks.com.
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