Part 1: Financial Powers of Attorney
The financial power of attorney is a logical starting place for a blog series on the basic elements of elder law and estate planning. It is often considered the most important estate planning document by elder law attorneys.
Clients are often surprised when I explain that their financial power of attorney is likely the most important document I will prepare for them. But, if you take a step back and think about it, it makes perfect sense.
I see clients on a daily basis from the area where I grew up, the Pennsylvania coal region. These are hard-working, blue collar people who have worked extremely hard to earn every penny in their bank account. Many have scrimped and saved so they could provide for their families and better their children’s lot in life. Often, they’ve kept a close, watchful eye over their checkbook.
There comes a point in time for many people, however, when they just can’t do it anymore. It is at this point that someone else – usually a child or other close relative needs to take up the baton and help make sure the lights stay on, bills are paid and groceries are stocked in the refrigerator.
Financial powers of attorney are vital because they allow my client to choose who they want to help them when they are no longer able to manage their finances. Some clients struggle with the thought of not being able to manage for themselves in the future or giving up control of their finances. Quite the opposite, I see the signing of a financial power of attorney as an empowering event. You, the client, can choose who you want to perform these duties if you are unable to do so one day. You have the power. You make the choice.
Secondly, financial powers of attorney are extremely important when clients need to protect assets from the cost of long-term care. A well-written power of attorney can allow an agent to engage in crisis planning if nursing home care is necessary. Not all powers of attorney contain the language necessary to conduct crisis planning and the law in Pennsylvania is very specific about what needs to be included to give the agent this type of flexibility.
In this arena, planning ahead is crucial. Powers of attorney need to be executed when the client has the capacity (mental ability) to do it.