There are generally two types of Powers of Attorney. It is important that you know the difference and know which one you do, or should, have.
You can learn more about funding your trust here.
The following is a transcript of the video above:
What is a power of attorney?
This is episode 21 of Estate Planning Weekly. I am your host, Don Rolfe, I'm the owner and founder of Northwest Legal Planning and Estate Planning and Probate Law Firm located in West Linn, Oregon. And serving the greater Portland metro area.
Just the other day I got a telephone call from someone wanting to know what the power of attorney they had was good for and what is it. This is a question that has come up in the past so I thought I would do a quick little video and let you know generally what a power of attorney is.
The first thing you need to know is in general terms there are two types of powers of attorney. There is just a power of attorney and then there is a more advanced document called a durable power of attorney.
So the things that those two documents share in common is they both appoint an agent that you grant certain powers. Generally it can be anything that you can do as an individual you can grant your agent to do them on your behalf. So, dealing with your finances and your bank accounts, purchasing property, selling property, just about anything that you can do you can appoint an agent to do those things for you.
The difference between the two types, just a power of attorney and a durable power of attorney is that the first one, the agent can only operate if you are still able to do those things. So as long as you have capacity to sign checks and you've granted your agent the power to sign checks for you, they can sign checks for you. But if you become incapacitated and you are no longer able to sign your checks then that incapacity also affects your agent under a regular power of attorney, and they are no longer able to sign checks because they're deemed to be incapacitated as well. However, if you have a durable power of attorney that agent would still be able to sign checks, buy property, sell property with the powers that you've given them even if you are unable to do so yourself at the time. It's durable. The power goes past your incapacity.
Then we get back to the similarity of both of them. When you pass away both a regular power of attorney and a durable power of attorney lose all effectiveness, your agent can no longer act.
By the way, if you have a specific question about this I'm happy to answer any questions that you have and you can get on the phone with me or meet me in person, come for free half hour if you'd like, by going to myestateplanmeeting.com. You're also welcome to leave a comment below this video and I'm happy to answer it but if it's something that you'd like to keep private do go and schedule a time with me.
Now, the reason that we have these power of attorneys and that we put them in every estate plan whether it's a will-based estate plan or a trust-based estate plan is because we want to have someone that's able to work with your finances and your assets if you're no longer able to. Now, in the case of a will-based plan it's an absolute necessity, we have to have that power of attorney because we're not putting your assets inside of a trust that a successor or trusty could then work with. But even if we're putting together a trust-plan for you if you haven't completed funding your trust, which I'll link a video below about trust-funding and what that is.
But if you haven't completely finished funding your trust and there are assets outside of it you're successor or trusty won't be able to do anything with those assets, they'll need to operate under a power of attorney. And then, even if you pass away and there's an asset that was missed, you forgot about at that point in time that's why we also do a will if you have a trust.
Now there are some problems with relying upon a power of attorney whether it's durable or not. So in a will-based plan one thing that we have run into in the past is that financial institutions or another institution that your agent is trying to work with under the power of attorney will say something along the lines of, "this power of attorney "is stale 'cause it was signed more than a year ago." or "We don't accept this form of power of attorney." And in that case, there's really not much we can do because there's no law that forces a third party to accept a power of attorney. So that would require us or your agent getting appointed as a conservator for you and getting a court order allowing them to access those accounts.
So in the case of a will we always advise our clients to make sure that their institutions are gonna accept those powers of attorney before anything happens to them to take their powers of attorney and make sure they're on file with the bank and sometimes the bank will take that and they'll also have you execute a power of attorney on their form. But you want to make sure that all of the places where your agent may have to work with a third party that you have already presented that power of attorney.
And, again, if you do have questions you can schedule a time to chat with me and ask those questions and get my insight to your specific circumstances by going to myestateplanmeeting.com.
In the end, what this all boils down to and how I answered this person's question as to what is this power of attorney? It's a tool that we use inside of an estate plan to make sure that if you're unable to act but you're still alive that there's someone out there that you've granted powers to in order to manage those assets. So, it can be something as mundane as being able to write checks to pay your bills while you're in the hospital for a while. All the way up to making sure that you have someone that's able to, if necessary, sell your home and use that money for your care.
Again, I'm Don Rolfe with Northwest Legal Planning. I hope you enjoyed this. If you found it informative and you've and you'd like to learn more please do schedule a time to meet with me. If you know someone who this information may be helpful to please share it with them. I would really appreciate that. And if you liked the video just hit the like or the thumbs up button below. I would really appreciate that as well. Until next week, take care, bye.