Surprisingly, many power of attorney documents are missing this critical language. Most banks and financial institutions will not allow your agent to make withdrawals or investment decisions regarding your retirement accounts without specific language in the durable power of attorney authorizing such action. The same concerns surrounding real property also apply to your retirement assets (such as your IRAs, 401(k)s, and pensions). Whatever the case may be, it is crucial that you write a specific clause into your power of attorney document that grants the agent the power to buy, sell, transfer or gift real property on your behalf. They may need to transfer the property to another sibling to avoid probate, or they might need to sell the property to pay for your medical expenses. It is necessary for your agent to have a substantial amount of power to deal with your real property (such as your house, or your land). You can mitigate these concerns by placing limits on your agent’s ability to gift such as requiring your agent to get the approval of two other family members (your sibling or child) before any gift can be made. For some, this unfettered power could seem dangerous you may fear that your agent will act out of their own self-interest and gift items to themselves, or you may fear that they will gift substantial pieces of property (such as your house) to someone you would not have wished to have it. This is often done to avoid estate tax liability, pay for medical expenses, or simply to ensure that valuable pieces of property remain within the control of the family. Your power of attorney gives your agent the power to gift your real property, personal property or other financial assets to another individual. After all, how many of us have already sold enough houses to pay for medical bills to have established a pattern? What Specific Powers Should I Grant My Agent? Gifting & Transferring Assets This can create numerous roadblocks for your agent. Instead, the courts will typically interpret such a clause to mean that the power of attorney can act in any way that you, the principal, have a personal history of acting.
These documents use general clauses that state that your agent can ‘act in my name in any way which I could act for myself.’ Courts are traditionally adverse to these generic clauses because they put absolutely no limitations on the agent. Generic durable power of attorney documents found on the Internet are easier to obtain, but they will often not be effective in a court of law. The key to ensuring that your agent will be effective is to work with a lawyer to prepare a power of attorney document that is specific to the needs of you and your family. How Do I Make Sure My Power of Attorney Gives My Agent Enough Power? Situations like this, while unfortunate, illustrate why it is important for your power of attorney to vest your agent with enough power to effectively make decisions in your absence. Without these expressed powers, however, your brother would be unauthorized to take such action. If the power of attorney granted your brother the power to sell or gift your home on behalf of your health care needs, your home could have been sold to pay for the medical expenses. You’ve designated your brother to act as your agent, but your durable power of attorney only entrusts him to use your money to pay your mortgage, your car payment and other monthly expenses. You are left with brain damage after a severe car accident, without long-term care insurance, and your family is forced to foot the medical bills. It is reasonable to feel apprehensive about giving your agent unfettered power to gift or sell your property, or close your financial accounts. When designing a North Carolina power of attorney, you will need to determine the appropriate amount of power to give your agent, based on your personal circumstances. but withhold the power to manage your 401k or other retirement accounts. The power of attorney agreement specifies how far the agent’s power extends – you can give the agent the power to pay your bills, mortgage, etc. For example, if you suffered an accident that rendered you comatose, your agent can make decisions regarding your health care and finances. At Carolina Family Estate Planning, we review prospective clients' prior Durable Powers of Attorney on a regular basis. Unfortunately, we find many of them to be lacking key provisions that could help you and your family in a time of crisis.Ī durable power of attorney document legally entrusts an individual (your “agent”) to make decisions on your behalf, should you become incapacitated.
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