A common part of most estate plans, the power of attorney, is often the most crucial document drafted by your attorney; but it must be done correctly in order to be of any use.
The power of attorney allows someone else to make your financial decisions. When you create a power of attorney, you are nominating someone else to be your financial agent and allowing that person to act on your behalf. In the document, you designate the specific powers your agent will have as well as when the agent can start acting.
Good powers of attorney should have seven important elements. Check to make sure your power of attorney:
1) Was created after July 1, 2017 and is in compliance with the UPOAA—On July 1, 2017, Georgia adopted the Uniform Power of Attorney Act, updating our power of attorney laws. Highly supported by the Alzheimer’s Association, this update made some really important changes. Most importantly, it compels financial institutions, banks, and other third parties to accept POAs and protects principals from bad financial agents. POAs executed prior to July 1, 2017 will continue to be valid; but they will not benefit from the protections and powers in the new law. It is important that your power of attorney be updated and in compliance with this new law.
2) Names a trustworthy agent (and only one agent!)— Your power of attorney should only have trusted agents listed. Since you are giving someone else the power to spend your money, sell your property, and take out new lines of credit in your name, you should choose someone who is trustworthy, has integrity, and is good with money. Your financial agent has a fiduciary obligation to do what is in your best interest, but it is very difficult to get money back from bad agents once they have stolen your assets. We also recommend that you name one primary financial agent as well as more than one successor agent. The successor agent can act if your primary agent resigns, dies, becomes incapacitated, is no longer qualified to serve, or has declined to serve. And although you can name co-agents, we strongly suggest you stay away from this option. Having co-agents that have shared authority can delay and confuse important financial decisions.
3) Is accessible by agents— Many assume that their powers of attorney should be kept in safe deposit boxes or other secure locations. In reality, all estate planning documents should be accessible by agents in the event of a sudden crisis. If you ever lose capacity and your agent must step in on your behalf, it is imperative that your agent be able to find your original estate planning documents.
4) Was properly executed— Georgia requires that all powers of attorney be signed by the principal in front of one or more witnesses who are of sound mind and a notary. Make sure your power of attorney was properly executed by all required parties. 5) Grants general powers that include the ability to gift and create trusts— When creating a power of attorney, you can give your agent specific, limited powers or broad, general powers. When planning for incapacity, we recommend that individuals have general powers of attorney that include: giving financial agents the ability to buy/sell real estate property, open/close bank accounts, change beneficiary designations, set up trusts, apply for public benefits, pay taxes, handle retirement accounts, give gifts in unlimited amounts, etc. This is very different from having a limited power of attorney. A limited power of attorney grants very specific powers to a financial agent and usually for a certain amount of time or for a specific transaction.
6) Is durable— When a power of attorney is “durable” it is able to survive your incapacity. That is, if you ever lose the ability to make decisions, are in a coma, or are diagnosed with advanced stages of dementia, the powers are still good and your agent can still act on your behalf. This power of attorney would be of no use to you if it were not durable. All powers of attorney in Georgia are presumed to be durable unless otherwise stated.
7) Is effective immediately— Powers of attorney can become effective as soon as you sign it, at some future date, or after some qualifying event occurs. In legal words, powers of attorney are immediate or springing. Your agent either has the power to act immediately or the power to act at a certain date or after a certain event. Some springing powers say that they are effective once two medical doctors certify that you are unable to handle your own financial affairs. In theory, a springing power of attorney makes a lot of sense. Waiting to be certified as unable to handle your own financial affairs before an agent can make decisions for you seems to be the most conservative and secure route. In practice, however, it is difficult to find a medical doctor who is willing to sign a statement that one of their patients is unable to manage their finances (much less two medical doctors!). We have experienced springing powers as real barriers for financial agents. In many cases, having a springing power of attorney is just as effective as having no power of attorney. For this reason, we recommend that powers of attorney have immediate powers.
A power of attorney is a crucial part of any estate plan. Without a power of attorney in place, there may be no simple way for someone to access your financial accounts or handle your affairs if you lose the ability to do so. Contact an elder law attorney near you to create a power of attorney.
Miles Patrick Hurley is a Certified Elder Law Attorney in Atlanta, Georgia, serving the legal needs of the elderly population on issues related to aging, including retaining independence, quality of life and financial security. Mr. Hurley is one of only twelve attorneys in the state of Georgia to receive the Elder Law Attorney Certification (CELA), and one of less than 500 nationwide. https://hurleyeclaw.com