Be aware of power-of-attorney hurdles when estate planning

Be aware of power-of-attorney hurdles when estate planning

| Jul 1, 2021 | Estate Planning |

Having a power of attorney, otherwise known as a POA, can be extremely useful. If you’re incapacitated in Washington, D.C., a POA allows someone to make financial or medical decisions for you.

Unfortunately, a lot of people don’t know about the limitations of a POA. Though you may believe the matter is settled once you’ve established a POA, not all financial firms will agree.

Why financial firms may reject a POA

When someone claims to be your POA, a financial firm may refuse to accept his or her claim. Financial firms don’t want to get scammed, and they don’t want you to get scammed either. If firms were too trusting, it would be relatively easy for someone to pretend to be your POA.

For this reason, many financial firms have numerous stipulations about accepting someone’s claim as POA. Some common potential requirements include:

  • A recently executed POA
  • Listing a POA on the financial firm’s forms
  • Executing a POA every year
  • A POA within the state or, in the case of Washington D.C., the federal district

Avoiding trouble

The best way to avoid rejection of your POA is to communicate with firms while you can. Find out what their requirements are, and follow them to the letter. Make sure financial firms have copies of your POA.

You may also want to create a living trust. When you put assets in a living trust, the trustee you choose will manage those assets in the present. That way, if you’re incapacitated, your trustee can simply continue managing the living trust.