Most people understand the concept of a Power of Attorney for health care but when it comes to finance it can be a grey area.

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What is a Durable Power of Attorney?

Here is the definition I found on Google. I think it is a really good one.

Durable Power of Attorney is one of the most important documents anyone can have in place in the event they are unable to care for themselves. A Durable Power of Attorney acts as a permission slip, giving authority to a third party to do things on behalf of someone else who cannot do it for themselves.

Some people think if they have a Trust then they do not need a Power of Attorney as the Trust gives the successor trustee the power to control assets.

But this is a BIG Mistake!

Why?

Most of the clients that I work with within the Rockford area have the majority of their assets other than their homes tied up in a retirement account.

Whose name is your retirement account in?

  • It is not in your trust’s name as you would have to pay tax on it to put it into your Trust.
  • It is not held jointly with your spouse because the government does not allow for that.
  • It is in your name and your name ONLY!

So, What Happens If You Get Sick, Are In A Bad Accident, Or Suffer From Stroke Or Early Onset Dementia And Can’t Manage Your Own Money?

  • Your Will Is Not Valid Until You Die
  • Your Retirement Accounts Are NOT In Your Trust

The Only Person That Can Access That Money Is You And Now You Cannot!

This is a BIG PROBLEM!

But not as big if you have a Power Of Attorney with ALL the right language in It.

By the way, many people do not start doing this type of planning until they are getting close to retirement. If that sounds like you, please check out my FREE RETIREMENT VIDEO and CLICK HERE NOW!

What do you need to know about having a Durable Power of Attorney?

Here are a few questions that you might be having:

  • What is the difference between a Durable Power of Attorney and a General Power of Attorney?
  • Does a Durable Power Of Attorney Require A Lawyer?
  • How Long Is A Durable Power Of Attorney Valid?
  • How Often Does A Durable Power Of Attorney Need To Be Updated?

Let us check out a few of these questions together.

What is the difference between a Durable Power of Attorney and a General Power of Attorney?

A General Power Of Attorney ends on the date of your death or once you become incapacitated.

A General Power of Attorney would not be much help in any of the situations we described above but could prove helpful for short-term needs.

For example, if you knew you were going to be out of the Country and wanted to give the authority for someone else to handle your affairs while you were gone.

A Durable Power of Attorney remains in effect after you become incapacitated while a general Power of Attorney does not.

If you are trying to plan for the what-if when your health changes then you would likely want to use a Durable Power of Attorney.

Does A Durable Power of Attorney Require A Lawyer?

Most people do use an Estate Planning Lawyer to set up their Durable Power of Attorney, but it is not mandatory.

If you hire a lawyer to set up your Estate Plan, they normally include this document in with a package of legal documents they prepare for you.

You can also use services like Legal Zoom, or even go to your local office supply store to purchase ready-made documents that need to be filled out and signed.

Often it is required that these documents be witnessed and or Notarized to be useful and it is always a good idea to check the requirements of the State where you live.

For my Financial Planning clients who do not have a Lawyer of their own, we like to use a service called Trust Doc’s Online.

How Long Is A Durable Power of Attorney Valid And How Often Does A Durable Power of Attorney Need To Be Updated?

These are sort of trick questions, let me explain why.

The actual Durable Power of Attorney document typically does not expire and stays valid until either you revoke it, or you pass away.

That being said here is where it gets tricky.

Every financial institution has its own set of rules governing how they apply a Durable Power of Attorney.

There have been many circumstances recorded of a financial institution not honoring a Durable Power of Attorney because it was not done in their acceptable time frame or it did not meet one of their other requirements.

If you are at all skeptical that this can happen just Google Power of Attorney problems and read some of the articles that come up.

This is a bigger problem than many people realize until its too late. After all, if someone is incapacitated it is not like you can always go and have another form signed.

If this happens you could end up in court and this is the very reason you set up the document in the first place.

In my office, we use a proactive process and a checklist to make sure your Power of Attorney not only has the right language to make it easy to use but that we take all of the necessary steps in a proactive manner to ensure it works when you need it.

Obviously, I am not an Attorney so why do I go through all of this trouble for my clients?

My main job is to grow my client’s assets to help secure their current lifestyle and make sure they do not run out of money.

But if they cannot get to their money when they need it most, like when they are sick and infirmed what kind of an Advisor would I be?

If you want to make sure your Durable Financial Power of Attorney is going to work let us set up a time to chat so we can point out any problem areas.

And if you are getting close to retirement please check out our FREE RETIREMENT VIDEO today as it will help you Avoid Running Out Of Money In Retirement While Securing Your Nest Egg. CLICK HERE NOW to watch.

 

Disclosure: Investment Advisory Services offered through Retirement Wealth Advisors, LLC. (RWA) a Registered Investment Advisor.  Rockford Retirement Planning, Inc. (RRP,Inc.) and RWA are not affiliated. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Consult your financial professional before making any investment decision.

This information is designed to provide general information on the subjects covered, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that RRP,Inc. and its affiliates do not give legal or tax advice. You are encouraged to consult your tax advisor or attorney.

Annuity guarantees rely on the financial strength and claims-paying ability of the issuing insurer. Any references to protection benefits or lifetime income generally refer to fixed insurance products. They do not refer, in any way to securities or investment advisory products or services. Fixed Insurance and Annuity product guarantees are subject to the claims‐paying ability of the issuing company and are not offered by Retirement Wealth Advisors, LLC.

Social Security/Government Program Disclosure: Antonio Filippone of Rockford Retirement Planning, Inc and Retirement Wealth Advisors, LLC are not affiliated with or endorsed by the Social Security Administration or any other government agency

MDRT Disclosure: The Million Dollar Round Table is a trade association to help insurance brokers and financial advisors establish best business practices and develop ethical and effective ways to increase client interest in financial products, specifically risk-based products like life insurance, disability, and long-term care. Annual qualification requirements include demonstrating a set annual production requirement and agreeing to a code of ethics but are not based on client experience or performance. For more information regarding the Million Dollar Round Table eligibility, please see https://www.mdrt.org/membership/requirements/. Membership in no way constitutes an endorsement from Million Dollar Round table or any client.

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