While I know I have tried to enlighten the Boomer readers with the many virtues of a Power of Attorney, I don’t believe I have chosen this topic in quite some time and as such, thought it an appropriate topic. A high percentage of calls from current and potential clients concern the popular Power of Attorney.

For those of you who don’t know, a Power of Attorney names an agent to act for you. You can either provide the agent with those powers immediately or more likely, your agent will act for you if you become incapacitated. Many of you out there believe that if you are young and healthy, you have no need for a Power of Attorney. I strongly caution you otherwise. A person must name an agent and execute a Power of Attorney while they are in full command of their faculties. You need to decide now (while you can) who you want to manage your affairs if you could not. The Power of Attorney is a broad document; it provides your agent with multiple powers on your behalf....deposit checks, write bills, make medical decisions, sell real estate, initiate a law suit, etc. Unless you simply want a limited real estate Power of Attorney so your agent can attend a real estate closing on your behalf, you need such a broad document. You also want the Power of Attorney to be durable. That means that the POA will last even if you become incapacitated. (The politically correct term for incompetent). The Power of Attorney must be durable as if it lapses upon your incapacity, the whole point of having it becomes moot.

You also need to make sure your agent knows where to locate the Power of Attorney, if the need arises; i.e. in a safe deposit box, with your attorney, within a financial advisor, among your important papers, etc. So if a physician confirms that you are incapacitated, the Power of Attorney kicks in and your agent can then act for you.

These are the obvious pros to having a Power of Attorney. The advantage seldom discussed is that having a POA avoids a potential guardianship proceeding. If you do not have a Power of Attorney and you become incapacitated, your family will have to initiate a guardianship proceeding with the Orphan’s Court. You will need to hire a lawyer and also secure the services of physician. That physician will need to testify and convince the Court that the person is incapacitated and unable to manage his own affairs and that a guardian need be appointed. Obviously, the attorney will cost money and if the doctor is forced to come into Court, that will cost money as well. Best case scenario, the physician will execute an Affidavit at no charge to the incapacitated’s family. However, please keep in mind that the attorney would have worked to coordinate the preparation of the affidavit with the physician and that will cost money. There are also Court costs involved. Another negative is the emotional turmoil it brings to a family. This is often your typical role reversal where an adult child is petitioning the Court to appoint a guardian for an elderly parent, often with dementia and/or Alzheimers. It is a sad and emotional process and one that I would not wish on my worst enemy. A simple way to avoid having to go through a guardianship proceeding is to have a Power of Attorney. So if you have your POA and become incapacitated, the person you chose will step in and take care of your affairs. Obviously, the Power of Attorney (and the guardian) are held to high fiduciary duties and can be removed in the event that they are not acting in your best interest.

So in closing, call your attorney and make sure you are covered. A Power of Attorney should cost you in the neighborhood of $150.00 and is simple to prepare. Both the Principal and Agent need to sign the Power of Attorney before a Notary Public and the original should be kept in a safe place. A guardianship proceeding could cost you anywhere from $1,500.00 to $5,000.00, depending on the complexity and whether or not the guardianship is contested. Often times, two competing members of the family each want to be guardian. This is often your most messy and expensive proceeding.