By LAURA T. COFFEY
You may have a will and keep it up to date, but if you don't give your spouse, child or other trusted person a durable power of attorney, you could run into serious complications.
1. Understand what it accomplishes. Durable powers give someone else legal authority to make financial decisions for you if you lose the capacity to make them yourself. Your spouse or children do not automatically have that right.
2. "One-size-fits-all" may not fit your needs. You can buy generic durable power forms in office supply stores or copy them from state law books. If you pay a lawyer to draft a power of attorney for you, it should be custom-designed.
3. Don't set yourself up for abuse. The individual, or "agent," you select to represent you must have enough power to take care of your financial affairs, but you can specify actions that he or she is not authorized to take.
4. Consider specific powers carefully. Decide with your lawyer whether your agent should be permitted to: change beneficiary designations; sell your real estate; file your tax returns; make gifts for tax or Medicaid planning purposes; buy assets from and sell assets to you; or combine his or her assets with yours.
5. Build in added safeguards. If you designate one family member as the agent, you can have him or her open your books to the rest of the family at certain intervals. You also can require a second signature on checks above a certain amount.
6. Insert the "magic language." Be sure that the document describes the power of attorney as "durable." That means it will remain valid even if you become unable to make decisions about your financial affairs.
7. If you are the agent, you're going to have problems opening and closing accounts, signing and endorsing checks, filing tax returns and buying and selling stocks unless you're specifically given authority to do each of those things.
8. Banks, brokers and mutual funds can be skittish. To ensure that they will allow you to make transactions, the person you are representing should give each of them a copy of the power of attorney and request a signed letter saying they will accept it.
9. Know the limits. Be aware that the Social Security Administration, the Department of Veterans Affairs and some other government agencies will not accept a power of attorney. You must go through each agency's procedures.
10. Think outside the box. Don't put the power of attorney in a safe-deposit box unless the agent already has access to the box.
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