Check Your Powers of Attorney
You may hear a lot about keeping your will updated. We don’t hear as much about updating your powers of attorney but that may be a more important estate planning issue.
Contact Steve here:
https://calendly.com/stevewershing/inquiry
Full Transcript below:
00;00;00;00 - 00;00;29;15
Unknown
Welcome back to 30 Minute Money. My name is Scott Fitzgerald, and I am here at Roc Vox Recording and Production, just outside of Rochester, New York. And, I have Steve Wershing with me. Hey, Scott. He's back in studio. How are you doing? I'm doing good. How are you? Nice to see you. Nice to see you, too. And, it's interesting that we're talking about this topic because this is something that's, been thrown around in my family quite recently.
00;00;29;15 - 00;00;46;15
Unknown
Power of attorney. Yes. And that's very important. It is very important. And I wanted to talk about it because people when we people talk about a state or powers of attorney, powers of attorney, it's super powers of attorney. when people talk about a state documents, they, you know, a lot of the attention is given to a will.
00;00;46;15 - 00;01;07;24
Unknown
And how important a will is and that kind of stuff. And I wanted to take a little bit of time and talk about the power of attorney, because from my perspective, for a lot of people, especially people who are approaching retirement. Power of attorney is actually a lot more important for my for my perspective than the will. So if you go to a to an attorney to update your state documents, they're going to give you what we call the big three.
00;01;07;24 - 00;01;29;22
Unknown
They're going to give you a will, a power of attorney and a health care proxy. Right. A will is the instructions on what to do with your stuff when you pass away. That's what it will as a health care proxy, is a document that expresses your wishes. yeah. How you want medical care to go in certain extreme situations.
00;01;29;24 - 00;01;51;20
Unknown
And so if you're not capable of providing guidance or feedback, then it lays out your wishes so that somebody else in your place can come in and express those wishes to the health care institution. And the power of attorney is a document that that enables someone to act on your behalf. And here's why. I think that's the most important one.
00;01;51;22 - 00;02;07;29
Unknown
let's just talk about wills and powers of attorney. If you die without a will or if you die. Yeah, if you die without a will, the state has a system for how they'll distribute stuff. There's a standard. They're not going to make it up. There's a standard flowchart that you can look up and the state will just follow it.
00;02;07;29 - 00;02;22;05
Unknown
And if you have if you have a spouse that goes to them, if you have kids, it goes to them. If you don't have either of those and you have parents, it goes to them. But there's this whole big decision tree that they will follow based on whatever situation you're in, and they'll figure out how to distribute your assets.
00;02;22;12 - 00;02;44;14
Unknown
But but if you're incapacitated and you can't make decisions or execute things on your own, then it's really important that you have somebody who can step in and do that on your behalf. So if you get sick or you're in a car accident and you're incapacitated, you know somebody's got to pay the bills. Somebody's got to take care of the stuff that comes up.
00;02;44;16 - 00;03;03;11
Unknown
And if you don't have a power of attorney, the alternative of that is messy and expensive and nobody wants to go through it. They, you know, ultimately they would have to get a conservatorship and, you know, put somebody in a position, get a court to, to appoint somebody to, to be able to stand in your place. It's not there's no reason for that.
00;03;03;12 - 00;03;24;13
Unknown
A power of attorney is really easy to do. and it's really important to have. So, it's actually it's it's not even that the attorney has to draft anything. Everybody to, you know, most people in New York use a what's called a statutory form. So it's a form that is designed by New York State and, and put out by them.
00;03;24;13 - 00;03;43;22
Unknown
And so you just, you know, I would still suggest getting an attorney's help on it, but really, all you do is fill out the statutory form, sign it, have the attorney witness it, and there it is. It's it's really simple. It's really easy. It's not very expensive. And it's just it's really important in case anything happens. Yeah, I, I do have a question.
00;03;43;22 - 00;04;03;01
Unknown
It's not entirely related to this, but when you're talking about wills and who gets what, what happens to a person's debt when when they pass away. Is it just gone or does someone have to assume that debt? It kind of depends. it's not it's not. There's an I don't think there's one pat answer I can give you for that.
00;04;03;04 - 00;04;25;11
Unknown
they may have a claim against your estate. it may be it may be collateralized by an asset. So it really kind of depends. Gotcha. so I think everybody ought to have a power of attorney. I think everybody ought to have a couple powers of attorney. So you can appoint as many powers of attorney as you want to.
00;04;25;12 - 00;04;48;10
Unknown
You don't have to have just one. What most people have is one primary one. And then I think you should have at least one backup. But a lot of people will have several backups. So let's say that, let's say that you, you're married and you have adult kids. You would probably want your spouse to be your primary power of attorney.
00;04;48;12 - 00;05;09;05
Unknown
But we want some backups, too, because it's not really that hard to imagine a situation where the two of you might be together and get into an accident or something like that, and you might both be out of commission for a while. And so you need somebody to come in and step in and do that. So if you have, for example, two adult kids, you could give you could make backup powers of attorney of each of them.
00;05;09;07 - 00;05;39;10
Unknown
And then either one could step in and make decisions on your behalf if the primary power of attorney was not available. Now, you can, you can have multiples and you can say that they can act independently or that they need to act jointly. My suggestion most of the time is that you let them act independently, because if you make a joint, then you've got to get both of them, basically both of them together at the same time and agree on something you know and cooperate with.
00;05;39;10 - 00;05;59;25
Unknown
And that just adds all kinds of complications to things of, because the one of the reasons why you would have multiple backups is because if your, you know, if if your adult son is doing this solo bike trip in Manitoba across the frozen lake and doesn't have cell service right now, so you want your daughter to be able to step in.
00;06;00;04 - 00;06;17;18
Unknown
You don't want to have to force them to do it together. I mean, the whole idea is to have multiple backup. You don't even know, but you're writing an 80 sitcom. that's it's not actually a sitcom. Actually, one of my biking buddies did that a couple of months ago, and that's why it's still present to me is like, why would you ever do that?
00;06;17;18 - 00;06;38;18
Unknown
But I'll see. We learn from others. Mistakes will advance. Not the first time he's done it. So it's not a mistake, but it's like God. But I would never do it right? Not my, not my jam. So, you know, have a primary. It's a good idea to have a backup. It's, you know, not a bad idea to have multiple backups and let them work independently.
00;06;38;21 - 00;07;09;28
Unknown
and can you can you have, there's a power of attorney is is someone who can act in your stead. Can you decide like this power of attorney is only financial stuff. This power of attorney is only personal stuff or whatever. So if you look at the statutory form, you grant powers of attorney and there's this big long list of things that they can do, and you would initial the ones that you wanted that person to be able to do, or you can initial this thing down at the bottom that says all of that stuff up there.
00;07;09;29 - 00;07;26;05
Unknown
Okay. so yes, you could, you could have one power of attorney that they can do, you know, some kinds of things and another power of attorney. They could do other kinds of things. So it complicates things a little bit. But if you have concerns like that. Yeah, you can do that. Sure. Now one of the other important things is that you keep it current.
00;07;26;06 - 00;07;55;00
Unknown
Now I should qualify this because if you if you, appoint a power of attorney, and you go ten, 15, 20 years, it's still valid. It's still okay. But the state does change the form periodically. And the last significant update was 2021. But there were a couple other significant updates a few years before that. And and the the updates sort of changed.
00;07;55;03 - 00;08;17;14
Unknown
What different do what powers of attorney could do. The last big one had to do with whether whether and how they could make gifts. And that was important. And so although older ones are still valid, you will get some financial institutions who push back against it. If you if you show up and show a power of attorney from 15 years ago, you're going to get some financial institutions that push back on that saying, we can't honor that.
00;08;17;20 - 00;08;33;06
Unknown
And then you got to bring the attorney into it, and they got to write a letter and they got it. You know? Yes, they have to honor it. They can't just decide not to honor it, but they're just going to hope that you give up easy and walk away. Well, they're going to try to get out of liability by, you know, refusing to to honor it, which is not valid at all.
00;08;33;06 - 00;08;55;21
Unknown
But, but but, you know, basically, you can avoid that by just, you know, checking with your attorney every so often and just saying, hey, has there been an update to the form? Should we execute a new power of attorney form? So if you haven't done one for ten years, it's probably a good idea to go back to your attorney and get an updated one, because your old one is still valid, but you can avoid your power getting into a bunch of hassles with institutions.
00;08;55;21 - 00;09;02;18
Unknown
If anything happens to you by having an updated form.
00;09;02;20 - 00;09;37;13
Unknown
Your retirement is at risk not from the stock market, not from inflation. Taxes are putting your retirement at risk. I'm certified financial planner Steve and I specialize in helping people create low tax retirement. Unmanaged taxes can take 30, 40, even 50% of your retirement income. Learn how to defend yourself against excess taxation. Our complimentary webinar. We'll cover all the principles you need to know to protect your money for you and your family, and keep it away from the government.
00;09;37;15 - 00;09;58;26
Unknown
This free webinar will cover how taxes are different in retirement. The taxes you pay in retirement that you don't have to pay during your working life. How to move tax savings into a tax free environment. The widows tax, the Secure act, the Secure act 2.0 and what they mean to you. The webinar is free, but you have to register to save your spot.
00;09;58;26 - 00;10;28;05
Unknown
So go to Focused Wealth advisors.com/webinars and find out more and sign up right there. Even if you're not planning to retire for the next 5 or 10 years, this information will be critical for you. The longer you have to put the strategies into effect, the more you can accomplish. That's focused wealth advisors.com/webinars to find out more and to sign up today.
00;10;28;07 - 00;10;52;12
Unknown
Powers of attorney. Lots of great information there. What's your 30 minute action item? 30 minute action item is check on your power of attorney. And I advise you to check on your podcast playlist. As I was trying, I didn't work. Yeah, whatever. 30 minute money, three zero minute top money. We've got videos. We've got audio, and, it's all for you to take advantage of because it's free information.
00;10;52;17 - 00;11;21;09
Unknown
And if you'd like to get this information in a weekly newsletter focused Wealth advisors.com/publications, thanks for joining us. Catch us next time on 30 Minute Money.