INDUSTRY INSIGHT
legal services
SpoNSoReD CoNTeNT
Some Like It Hot
Or How Not to Get Burned by Your Power of Attorney
T
he Financial Power of Attorney authorizes someone to act on
your behalf when you’re incapacitated, tired, or traveling in
Europe when your house burns down. It can be as broadly or
narrowly written as you want. What it should not be is a form that you
download on your computer or get from a friend and then sign blindly.
The Power of Attorney document is just what it says—powerful.
Ask any estate attorney what document has the most potential to be
abused or misused and he/she will tell you it is the Financial Power of
Attorney. In 2015 the Pennsylvania Legislature addressed this issue by
deciding that certain “HOT POWERS” would need to be expressly given
in a person’s Power of Attorney. If your Power of Attorney document is
dated after January 1, 2015, it must specifically grant these powers to
your agent (your “POA”) or your agent cannot exercise them.
The HOT POWERS include the power to create certain trusts (including
an irrevocable asset protection trust); to change rights of survivorship
on bank accounts and other assets; to change a beneficiary designation
including on life insurance and retirement accounts; to delegate
authority granted under the Power of Attorney; to exercise certain
fiduciary powers of the Principal; and to disclaim property. You probably
don’t understand what some of those powers mean, which makes it all
the more important to talk them over with your attorney.
Many of the HOT POWERS become more important as you age. That
means you should take great care now in deciding who to give the
powers to. The decision should involve an in-depth conversation with
your estate attorney. Your estate attorney is equipped to evaluate your
situation and help you balance your personal goals and objectives,
along with your plans for your loved ones, while keeping in mind your
specific financial situation.
A common drafting option involves the gifting powers. You may
wonder why your agent should have the power to give away your
money. Sometimes you may want your agent to give your children and
grandchildren money each year, or to continue your church giving.
Sometimes giving away some of your money will make sense tax-
wise. And when your family is trying to qualify you for a government
program like Medicaid for long-term care, having the power to transfer
your funds will be critical.
It is also not uncommon to give certain HOT POWERS to your original
agent (such as your spouse, a trusted child, or your closest sibling),
but limit the power of the successor agent to give away your money.
You may also choose to have your successor agent get the approval of
additional family members before exercising some of the HOT POWERS.
These carefully crafted limitations can help create transparency among
family members while curbing potential abuse of the powers.
At the end of the day you want to give your agents the power
to accomplish your goals and objectives, but you want to craft the
document as carefully as possible to prevent yourself or your loved
ones from getting BURNED.
This Industry Insight was written by Nora Curley Peace. Nora Curley
Peace, is a Chatham University and Duquesne University’s School of Law
graduate. She has practiced in the area of Estates & Trusts for the last
twenty-five years. Her other area of concentration is Business Law. Nora
and her husband Arnie, of Peace Dental fame, have been a part of the
Shaler business community since 1993. She is the current Treasurer and
former President of The Mid-Atlantic Milk Bank, which she helped start
in 2014. The organization helps medically fragile babies thrive through
the distribution of pasteurized human breast milk to primarily NICUs in
Pennsylvania and the surrounding states.
shaler ❘ Summer 2018
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