Who’s got the power?
In my last blog post, I discussed the different stages of retirement: the go-go years, the slow-go years and the no-go years. I’d like to use that as a springboard for this blog post, which focuses on having a power of attorney in place for financial and health care matters. Events necessitating the proper paperwork are most likely to happen in the no-go years.
A non-durable power of attorney becomes invalid if you become mentally incompetent, but a durable power of attorney stays in force should you become mentally incompetent. A springing power of attorney can be designed to not be effective until a named event happens, such as becoming mentally incompetent. People like this alternative because the power doesn’t go into effect until needed. Having a separate health care power of attorney for medical issues versus one in place for financial matters is often preferred.
A health care power of attorney is different from a living will, which is where you spell out the types of medical care you do or do not want in the event you are unable to speak for yourself.
According to the Nolo.com article, “What do my living will and power of attorney for health care cover?”:
In most states, living wills ask you whether or not you want to receive life-prolonging treatments at the end of life. Such procedures typically include: transfusions of blood and blood products, cardiopulmonary resuscitation, or CPR, diagnostic tests, dialysis, administration of drugs, use of a respirator and surgery.
The health care power of attorney lets the person with the power make health care decisions on your behalf outside of what is spelled out in the living will.
It’s also important to have a valid will in place. Make sure your beneficiaries are current on your insurance policies, bank and brokerage accounts, retirement plans, etc. Naming beneficiaries in the will that are different from those named on the beneficiary form is a common mistake. Assets that pass to named beneficiaries in the account or plan documents may not need to be named in the will at all. That’s something you should take up with your attorney.
Speaking of attorneys, can you do all this without an attorney? Probably. Should you? Probably not. You want to get it right, and an attorney can draft documents that accurately reflect your wishes. That said, some states have power of attorney forms available for do-it-yourselfers.
A convenience account is a half-measure that can work for some seniors. A trusted family member or friend is named as a signatory on an account, even though the money in the account is not theirs. It’s not a joint account, just an account that may be accessed by either person. According to Nolo.com, these accounts are available in about half the states. The money in the account can only be spent for your benefit and the convenience signor doesn’t inherit the funds at your death; the money becomes part of your estate.
Do you have a living will, medical power, durable power, and will in place? If not, why not?
Read more about the Basics of estate planning.
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