Do I Need a Power of Attorney?

Answer: The answer is yes. Clients often ask this question and our answer is always the same, no matter how your property is titled it is still necessary to have a comprehensive Power of Attorney document in place. A Power of Attorney is a document in which a person (the Principal) can designate an Agent (an Attorney-in-Fact) to act on his or her behalf with respect to financial or legal matters. A Power of Attorney, in most cases, is effective when signed and contrary to the beliefs of many, there is no requirement that the Principal be incapacitated or unable to handle their own finances in order for the Agent to act. Once the document is signed, then both Principal and Agent have the power, concurrently, to transact business on behalf of the Agent, to the extent that the document permits.

Although you can access all accounts that you and your spouse hold jointly without a Power of Attorney, you may still find yourself in a situation where one would be necessary. A comprehensive document provides for more than just simple access to accounts. For example, a Power of Attorney can allow your Agent to access and manage any retirement accounts you own. This is important because most retirement accounts are owned by only one person and, absent a Power of Attorney, the account could be inaccessible in a crisis. Also, without a Power of Attorney, there is no person authorized to communicate with any Pension Plan or your employer should the need arise. Another example of a time that you may need a Power of Attorney is in the context of Medicaid Planning. If your spouse suffers a catastrophic illness and requires long term care in a skilled nursing facility, Medicaid Planning will be necessary to preserve the assets. The healthy spouse can engage in crisis planning (despite the five year look-back), which will protect most if not all of their assets. Part of this plan would be to transfer the home and any assets that were either joint or in the sick spouse’s sole name to the healthy spouse. While you would be able to transfer the joint assets without the use of the Power of Attorney, you would be unable to transfer the assets in the sick spouse’s sole name without a Power of Attorney with an unlimited power to gift. Without this power to gift, you would be facing a situation wherein you would need to seek Guardianship to have the power to make the requested transfers. For these and many other reasons, the Power of Attorney can be invaluable in a time of crisis.

A Power of Attorney is an important document and we would advise you to meet with a professional who practices in this area to discuss this in further detail.