We all need a Last Will and Testament. Anyone who calls us for an estate plan, is motivated almost entirely by this innate desire to have a will. And rightfully so. After all, don’t you want to decide who receives your holdings?
But, beneath the surface, there is so much more to the story. When it comes to our family business law approach, we prepare estate plans that are comprehensive. Death isn’t the only thing to plan for. Stroke. Heart attack. Car accident. Any one of these can render us out of commission for any given period of time.
I am a member of Wealth Counsel–a highly regarded estate planning practice group. Last week a poster on one of the listserves asked the question: How much for a conservatorship? The answer was astonishing. The prices ranged from $5,000 to $15,000. This cost could be avoided with an $85 power of attorney.
Before I give the “Top 5 Why”, a person must first have a basic understanding of what a power of attorney is. Simply put, it is a document that you sign, authorizing a person to act for you on your behalf while you are still alive but unable to. Often times, before we die, we are incapacitated. Not all of us are lucky enough to go from being able to manage our affairs to just being dead.
A list that David Letterman would be proud of, here are the Top 5 reasons you need a power of attorney:
1. Money. If you are unable to act, and a legal document needs to be signed for you on your behalf (Farm Service Agency paperwork, IRS tax return, checks, loan documents, Medicaid or Social Security benefits, or anything else important) then your family will have to ask the Court to appoint a conservator over you. A conservator is a judicially appointed “trustee” who will manage your legal and financial affairs while you are recovering or waiting to die. This will require your loved ones to hire an attorney, get an insurance bond ($3,000 or so), possibly litigate over who is in charge, and then require public filings galore of your most private business matters. This is just the beginning. Your family will love the required training involved and annual reports. Simply put, a power of attorney may save you thousands.
2. You Pick. Do you want a Judge picking who manages your money, real estate and business affairs, or do you want to? By signing a power of attorney, you get to pick who takes the wheel after you can no longer drive. A power of attorney allows you to stay in charge.
3. Family Harmony. Death changes everything. And so does incapacitation. Do you have a son renting land from you? Do you have a jealous child from out of the area that wants to be in charge of the family farm from afar? A power of attorney puts the blame on your shoulders, as you rest peacefully, instead of leaving it to an all out boxing match in the courtroom between your kids. You can account for the family dynamics, ahead of your departure.
4. Efficiency. Lawyers can be slow. By the time your family realizes that they need someone to sign documents for you, they probably should have seen a lawyer 3-4 weeks ago. Then, by the time a conservator is appointed, it will be another 4-5 weeks later. Pleadings will have to be drafted and a court date set. It is a process. By the time a conservator is appointed, it could be 6 weeks following your incapacitation. Who knows, by then, you might be ready to golf 9 holes and feeling great. Or, your farm could be in foreclosure because you couldn’t get loan paperwork signed in time because you didn’t have an authorized representative to sign your loan extension. Regardless, a power of attorney can act now.
5. Advanced Estate Planning. Incapacity oftentimes forces a spouse to “check things out.” What happens if you head to the nursing home and are unable to act, and it is discovered by your wife that you failed to change the deed on your house from 50 years ago because it was only in your name when you got married? With you only a few days from death, what happens to the house? With your power of attorney, your wife could act quickly by executing a deed conveying it to you and her, as joint tenants, so that your estate could avoid probate and your spouse get the home.
Notably, not all powers of attorney are created equal. In some instances, we have seen insurance companies reject certain powers of attorneys. At Andrew Hoffman Law PC, LLO, our estate planning platform utilizes the most elaborate and sophisticated planning documents available. When you need it, you need it to work.
Get started right now on your estate plan, which will include a power of attorney, by going to: http://andrewhlaw.com/estate-planning/ and entering your information. We will be honored to help you get started on your plan.
Let us help. Andrew Hoffman Law…providing legal services for your family business needs.