Jan L. Warner & Jan Collins
Question: For years, my husband refused to even think about the possibility that he was not "immortal", much less do any type of planning -- except to sign a will leaving everything to me. He would always say, "I’ve never had a sick day in my life" or "I’ve never missed a day of work". Then, last month, he suffered a massive stroke that has paralyzed him and left him confused. Although he is in rehabilitation, I doubt he will be able to do anything without assistance. At 73, I feel helpless. I am not only responsible for his care, but also for handling the family finances that he took care of exclusively. In the process, I have been denied access to withdrawing funds we need from his IRA, annuities, and life insurance. We have no children, so I have been borrowing money from my sister until I can sort things out. She tells me that all I need to do is take her husband’s power of attorney, retype it, and have my husband sign it. Will this take care of my problem?
Answer: Maybe -- but probably not. Unfortunately, more Americans than you may think believe that if they have a will, they are all set. Unfortunately, like your husband, many Americans discount the need to sign durable powers of attorney so that if they become incapacitated, loved ones can make economic decisions for them. And unfortunately, too many Americans choose "canned" power-of-attorney forms that do not fit their needs.
Valid in all 50 states, a power of attorney is a written document by which one person (the "principal") gives another person over the age of 18 (called an attorney-in-fact, a proxy, or an agent) the legal authority to act under certain defined circumstances and to accomplish certain defined acts. A corporate fiduciary – like a bank trust department – can be appointed as an agent to make these decisions.
"Durable" means that the authority granted by the power of attorney continues past the principal’s incapacity -- which is when it is needed most. If the power of attorney is not "durable," the agent’s authority terminates if the principal becomes incapacitated. The authority granted under a durable power of attorney begins when the principal signs it and remains in effect until the principal’s death.
For those who do not want their agent’s authority to become effective until they become incapacitated, the "springing durable power of attorney" is an option not found in stores. This document should be prepared so that the agent’s authority "springs" into effect when the principal becomes unable to act due to mental or physical incapacity. "Incapacity" should be clearly defined within the document.
Through a properly prepared durable power of attorney, the principal can decide and control how much power to give the agent, and under what conditions the power may be exercised. So long as the principal has mental capacity, he or she can change or cancel a power of attorney at any time after signing it.
In your situation, the first order of business is to determine if your husband still has capacity – that is, the ability to understand that by signing or making his mark on a power of attorney, he is giving you complete authority to deal with all aspects of family finances. Assuming he does, a durable power of attorney is the appropriate choice of documents. However, since the document should provide you with the authority to make gifts to yourself, draw down your husband’s IRA, and deal with all aspects of his insurance and annuities, we urge you to seek the help of a knowledgeable attorney who does not have a "one-size-fits-all" mentality and not rely on another’s work product.
