What would happen
to your financial affairs if you became unable to physically or mentally handle
them yourself? Is your spouse willing and able to handle them for you? While you
are still physically and mentally capable, you should consider executing a General
Power of Attorney.
You name a person
who will be your "agent" and you vest in that agent the authority to
act on your behalf as if you were performing the act yourself. The agent could
be your spouse, one or more of your children, a trusted friend, or a
combination. Most financial institutions require the agent to provide an
originally executed power of attorney as evidence of your agent’s authority.
The agent’s
power usually is effective immediately upon signature; however, in a
"springing" power of attorney, your agent is vested with authority
only upon your disability or incompetency and divested of authority if you
regain competency. Your lack of competency must be evidenced in writing by one
or more physicians. While springing powers may provide a stopgap step for
potential fraud, they also could cause unnecessary delay for your agent. One way
to guard against fraud and reduce delay is to have all original instruments held
by your attorney and request that the attorney require some proof of
incompetency before he or she gives the original instrument to your agent. A
"durable" power of attorney remains effective even if you become
disabled or incompetent. Since 198, all powers of attorney under Louisiana law
are "durable" unless otherwise stated in the instrument.
A
"special" power of attorney is limited to a specific power as named in
the instrument, such as signing on your behalf at a real estate closing or
representing you before the IRS. A "general" power of attorney is
assumed to grant powers of administration but the instrument also must list
other powers expressly in order for the agent to act upon the powers. For
example, if you have been making gifts of $10,000 to each of your children for
several years, then become incompetent, your agent may continue to make the
gifts annually if the power is expressly listed in the instrument. Expressly
listing the power to change a beneficiary of a life insurance policy or a
qualified plan or IRA account is also important. These two express powers allow
your agent to make pre-mortem changes to your estate plans that potentially
could save your estate from paying unnecessary federal estate and state
inheritance taxes.
