When we are working with a new client we spend a significant amount of time becoming acquainted with their goals and circumstances. Of course we discuss their retirement dreams but also their estate preferences. This conversation usually includes some brief conversation about their children, their marriages, financial stability and ability to handle money. Then, more often than not, this leads to a longer conversation about our clients aging parents.
Too often estate planning focuses on what happens when someone dies. While this is obviously important, more complicated issues can arise before that event when health and cognitive abilities diminish. For years I have been convinced that your most important “estate” documents are your Financial Power of Attorney and Medical Power of Attorney. These documents enable someone to take care of your needs while you are yet living.
Your Will is a pretty straightforward document. At your death it will be presented to your local probate court and a judge will determine it’s validity. It’s not that simple with your Financial Power of Attorney. This will likely be presented to a financial institution – in fact several financial institutions! Each of those institutions are being asked to allow someone other than the owner of an account to have access to that account. You certainly don’t want an unauthorized person to be messing with your accounts. Financial institutions don’t want the liability of granting access to the wrong person.
Do you suppose they might have their legal department carefully scrutinize any documents seeking account access to someone other than the owner of the account? Suppose your Financial Power of Attorney was created in 2006. How will a bank know that what has been presented to them is the most recent document and that it has not be revised or even rescinded during the previous ten years?
We always encourage having professionally prepared estate documents by an attorney that specializes in estate planning. Can you get boilerplate estate documents online – yes. However you will never know if they will “work” until it is too late to “fix them.”
These issues and many more are discussed in a personal story in a recent Wall Street Journal article titled “the Difficult, Delicate Untangling of Our Parents’ Financial Lives. We have included a link to it for you here.