Power of attorney is a common tool used in estate planning and one you are likely familiar with if you have given any thought about how to handle your estate and end-of-life situation. The two power of attorney types are healthcare and financial. Within those two categories, there are varying levels of authority you may grant your agent – limited, durable, general, and springing.
Between all those options, it is not uncommon for important details to fall through the cracks during creation of the power of attorney document. Additionally, there may be loose ends you overlook after you initiate power of attorney. We have outlined four common mistakes people make with powers of attorney so you can feel secure in your golden years.
- Creating the wrong power of attorney. During the drafting of the power of attorney document, many people get tripped up in the appropriate level of authority to give their agent. A general power of attorney will give someone broad power to represent you in financial matters, while a limited power of attorney designation will grant someone authority in specific situations. It is important to communicate your intentions with your agent and estate planning professional so the scope of your agent’s power is clear to all parties.
- Making your agent a co-owner of your bank account. There is a difference between naming someone a co-owner of your bank account and simply adding that person’s name to the account. Unfortunately, that line is blurred enough that many people mistakenly give their agent all-encompassing access to bank accounts. That opens your property up to being vulnerable to your agent’s financial debts, among other adverse unintended consequences.
- Not giving your agent authority over all types of assets. If you are not familiar with the difference between stock options and commodities, you might assume they simply do not apply to your situation and skip over that area of your power of attorney document. However, you never know what the future holds. You might want to diversify your financial portfolio after you retire, or you might inherit financial assets from a family member. Just because you do not own a certain type of financial instrument now does not mean you will never own one, so it is wise to be proactive in this area.
Conclusion
Drafting a power of attorney document can have numerous pitfalls. Between your wishes and your agent executing those wishes, there is a lot to communicate to all of the applicable parties. Do not leave anything up to chance. Give us a call at (772) 221-3222 for counsel that can offer meticulous estate planning assistance.
