In this blog, we explore 10 common questions about Powers of Attorney in Pennsylvania. Powers of Attorney are a fundamental part of your estate plan, so make sure you see an estate planning attorney to discuss your Powers of Attorney.
- Why do I need a Power of Attorney? A Power of Attorney (POA) is important in case you become incapacitated, or you are incompetent and cannot manage your own affairs. An “agent” (the person you appoint as Power of Attorney) steps into your shoes to take over all of the activities and responsibilities that you can no longer handle. Because life expectancy continues to increase, there is more of a chance that any of us becomes incapacitated during our lifetime.
- Who should be my Power of Attorney? Choose a person that you trust wholeheartedly. I always tell people to choose your agent based on your gut feeling. If you have reservations about the person you chose, then it’s the wrong person. Try to choose someone who is local, responsible, competent, and typically younger than you.
- What happens if I become incapacitated and do not have a Power of Attorney? Guardianship proceedings may be needed if you do not have a POA at the time of incapacity. Guardianship is granted through the courts, and is burdensome for all parties involved. Worse, you have no say in who your guardian is. If several people try to become your guardian, then there are contested guardianship proceedings, which can drain your assets and leave you with a guardian who you don’t even know.
- If I am appointed as someone’s Power of Attorney, what are my responsibilities? You have a fiduciary responsibility to act in the person’s best interests. You must handle their money carefully, pay all bills, preserve assets, and be able to account for all of the funds. In essence, you step into the person’s shoes.
- How can I trust the person I appoint? There is no easy answer to this, but continuing to review your Power of Attorney document every few years will get you into a good habit of making sure the person appointed is still the person you would trust if something happened to you. Again, go with your gut feeling—if you’re questioning whether the person is trustworthy, they’re probably not.
- Is a Power of Attorney separate from my Last Will & Testament? They are very different. The purpose of a Last Will & Testament is to settle the estate when one passes away. A Power of Attorney is for incapacity/incompetency while you’re still alive. These two documents are always separate.
- Do Powers of Attorney expire? No. However, you should review your POA every few years. Banks and financial institutions may create extra legal hurdles if presented with an old Power of Attorney. My advice is to re-execute your POA’s every 5-8 years even if no changes have occurred.
- Can I appoint Co-Agents? Yes. However, Co-Agents can create logistical nightmares, and conflicts can occur easily. Think of your agent like a CEO. You need one person you trust to be able to take decisive action when necessary. I always recommend having at least two backup agents in case the primary agent is unavailable to serve.
- Why are there ‘Gifting’ powers in my Power of Attorney? Gifting powers are often used to take advantage of any Medicaid laws that favor spending down your estate if you need long-term care in order to preserve assets for your family. The gifting powers should be carefully written to comply with state law, and also to protect your estate from unscrupulous spending. In Pennsylvania, the laws on Powers of Attorney changed in 2015 regarding gifting laws. Check with your attorney.
- What is the difference between a Springing Power of Attorney and Immediate Power of Attorney? With a Springing Power of Attorney, two doctors must certify incapacity before the POA takes effect. This can lead to delay and problems. An immediate Power of Attorney does not require the doctors certification; the agent can take over at the time you can no longer handle your own affairs. Again, if you trust your agent, this won’t be a problem.
If you need assistance with Powers of Attorney or Estate Planning, call The Law Offices of Jeremy A. Wechsler today at (215) 706-0200.