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Why is a Power of Attorney Important?

by Jeffrey Asher, Estate Planning Expert
March 22, 2013

Question: People keep telling me my parents should assign me power of attorney. What makes this so important?

Answer: A Power of Attorney can be a powerful document, especially if your parents become unable to handle their financial affairs. But, a Power of Attorney can also be a dangerous document for the same reason. It depends on the selection of the person holding the power under the Power of Attorney, and the language used within the Power of Attorney.

A Power of Attorney is a legal document that appoints an individual or individuals (generally called the “agent” or “agents” or “attorney-in-fact” or “attorneys-in-fact”) to make financial decisions for the maker. A general Power of Attorney gives the agent the authority in the document right away upon the signing of the document. A springing Power of Attorney gives the agent the authority at some time in the future or upon the happening of a certain event. A durable Power of Attorney means the authority granted in the document survives the maker’s mental disability.

In the example of estate planning/long-term care planning, a Power of Attorney is important because it might allow the agent to perform certain transfers for estate tax planning or Medicaid planning purposes, qualify the maker for Medicaid and other government benefits, and deal with banks, utility companies, and credit card companies to ensure the maker’s bills are being paid, etc. If your parents require such planning, but do not have the mental capacity to make decisions on their own, then you might not be able to do the things necessary for your parents’ estate/long-term care plans without a power of attorney.

But, because of the dangers associated with a poorly written Power of Attorney, please be sure to seek a qualified attorney to help your parents prepare an appropriate Power of Attorney.

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Jeffrey Asher is a prominent Trusts & Estates and Elder Law attorney in Westchester County and New York City. Mr. Asher concentrates primarily in the areas of Estate Planning, Probate and Estate Administration, Elder Law, Medicaid Planning, and Special Needs Planning. Mr. Asher provides comprehensive legal services, tailored to meet your specific needs.

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