This is Strategy #17 from Lamson & Cutner’s publication, “25 Strategies to Prevent Financial Ruin from Long-Term Health Care Costs.” Click here to see the other strategies.
A Durable Power of Attorney is a legal document that allows a trusted person to make decisions for you, even if you lose mental capacity. While many people already have a Power of Attorney, most are unaware of the fact that their particular version is ineffectual for Elder Law planning purposes.
Effective June 13, 2021, former Governor Andrew Cuomo signed into law a new Power of Attorney. The new form is a single, shorter document, instead of the “Short Form” and the “Statutory Gifts Rider.” There are significant changes to this form.
- First, language that substantially conforms to the prescribed statutory language will be sufficient to make the POA valid. Insignificant mistakes in wording, formatting, punctuation, and the like, will not affect the validity of the document. A POA that has been properly signed will have a presumption of validity.
- Second, a Principal who is physically incapable of signing and initialing the document can have another person do it at his or her direction.
- A third and especially important feature of the new POA is that financial institutions are held accountable by the State to accept valid documents without delay. Banks and financial institutions that refuse to accept a valid POA will be subject to penalties and paying attorney’s fees.
Although some people are tempted to prepare their own POA’s by copying forms found online or elsewhere, this decision can lead to serious and unfortunate consequences. A POA with a wide scope of authority is crucial to ensure that any and all steps an agent may need to take are permitted. A POA form from before June 2021, that is signed after June 2021, is invalid.
A broad and well-crafted Power of Attorney may allow your agent to set up trusts, open new bank accounts, apply for and manage government benefits, and transfer or gift large sums of money. Due to this broad range of authority, it is essential that you clearly understand the meaning and scope of the document prior to signing it.
These are all critical reasons why it’s to your advantage to have a lawyer discuss the POA with you and draft your Durable Power of Attorney. As a foundational element in Elder Law planning, it’s simply too important not to give it the attention it deserves. The bottom line is you may be authorizing another person to do anything you could do with regard to your money and property. There are few decisions in life with more serious implications than that.
Many feel that in signing a Power of Attorney they are losing control or power over their own lives. In fact, the opposite is true. Effective planning gives you more influence over what will happen in the future than you’d otherwise have. If you do not have a comprehensive Durable Power of Attorney for Elder Law planning purposes, and you become unable to manage your own affairs, decisions will still have to be made for you. Except then, they’ll be made only after expensive guardianship proceedings in court, which will create delays and could deplete your savings dramatically or even completely.
Additionally, going to court means that a judge, who is a distant and unrelated third party, will be making decisions about your welfare. In that instance, you have less control than you would have had by effectively planning now to prepare in case there is a circumstance in which you’re mentally incapacitated.
For these reasons, we believe that in most cases the advantages of a Durable Power of Attorney outweigh the risks of potential abuse. Needless to say, you’ll want to pick someone you trust to carry out your wishes. One way to be secure and feel more comfortable with the arrangement is to retain the document in your possession, and advise the person you appoint as agent where it can be found if it is needed. It is not necessary to deliver it to your agent immediately.
A Durable Power of Attorney is a cornerstone of all effective elder and special needs planning. It allows you to specify who you’d like to be in charge, in the absence of being able to make your own choices. Having one that’s properly drafted creates options for the best possible action to be taken on your behalf in a difficult situation, as opposed to closing off support and creating problems for your family.