Most parents understand the importance of having both a will and a health care proxy. But in these uncertain times, it’s more important than ever for parents to have “power of attorney” for each other as well.
A power of attorney is a legal document pursuant to which one person (the Principal) appoints another person (the Agent) to act on behalf of the Principal. Why is it so important?
Consider these frightening statistics from the National Safety Council: In 2001, a person was disabled in an automobile accident every 14 seconds. Automobile fatalities, it is estimated, occurred every 12 minutes. Additionally, 3.9 million Americans suffered disabling injuries on the job, and another 8,000,000 had accidents at home that left them with disabling injuries. The bottom line is that we are all much more likely to suffer a disabling injury than we are a fatal one.
A will establishes what happens to your assets after you die, and a health care proxy expresses your wishes about the medical care you want to receive should you be unable to express those wishes yourself. But what will help your family manage its finances in the event you become mentally or physically incapacitated, even for a limited amount of time? In these instances, parents having power of attorney for each other can be of tremendous benefit to the entire family.
Having power of attorney enables parents to act on each other’s behalf. This could be important if the spouses maintain separate bank/brokerage accounts or credit cards. It enables you to sign documents that would normally require both you and your spouse’s signature, withdraw money from your spouse’s bank or brokerage account, and actively manage your spouse’s affairs during the time that he/she is unable to do so for himself.
There are different types of power of attorney documents; they can be drafted so that one person gives the other very broad power to act on his behalf or specific power to perform specific functions under clearly defined circumstances. A Durable Power of Attorney is one that remains in effect after the Principal becomes incapacitated. Since none of us can plan or know when we might become incapacitated, this is the type most useful for parents to have for each other. It can be drafted so that one parent can act as the other’s Agent only if the Principal becomes incapacitated, and the document stays in effect while the Principal is incapacitated.
When drafting a power of attorney document, consider the circumstances under which it would be used, and have your attorney draft the document accordingly. You want to be certain that the document enables you to act on behalf of your spouse in an emergency situation, but not make it so broad that the power could be abused or utilized unnecessarily. Having the ability to act on your spouse’s behalf could save you unneeded aggravation and despair in a time of crisis.
BERNARD A. KROOKS, J.D., CPA, LL.M (in taxation), CELA, is the managing partner of the law firm Littman Krooks & Roth P.C. with offices in White Plains and New York City. Mr. Krooks is certified as an Elder Law Attorney by the National Elder Law Foundation. He is president of the National Academy of Elder Law Attorneys (NAELA) and past chair of the Elder Law Section of the New York State Bar Association (NYSBA). Mr. Krooks may be reached at (914) 684-2100.
