Money

Is Your Financial Power of Attorney Up to the Task?

It is well understood that everyone should have a financial power of attorney (POA). A financial POA grants someone (called your “agent”) the ability to step into your shoes and make financial decisions for you (the “principal”) during your lifetime. If you become incapacitated without a financial POA, the court will have to get involved in a process called a conservatorship and appoint a person to fill that role. This can be a lengthy and expensive process. A financial POA helps you avoid this and allows you to control who is in charge of your finances.

Unfortunately, most people who have a financial POA in place don’t really look at the document to see if it meets their needs. On July 1, 2014, Iowa adopted the Uniform Power of Attorney Act. Since then a person creating a financial POA must now decide whether they wish to specifically grant their agent the authority to make gifts. If the financial POA does not explicitly provide that authority the agent will not be authorized to make gifts on behalf of the principal.

Why is gifting important? Even with the gifting authority, an agent must always act in the best interest of the principal. Believe it or not, sometimes it is in your best interest to allow someone to gift your money away. In our office we see families hindered in their plans to apply for Medicaid to pay for long-term care because they cannot move assets out of the applicant’s name to the spouse (IRAs for example). The applicant is over-resourced until the asset is moved to the spouse’s name. If the applicant lacks capacity to make a gift, this can only be accomplished with an expensive court-supervised conservatorship or a well-drafted financial POA.

If you don’t have a financial POA, get one. If you have one, make sure it is robust enough to accomplish your goals and give your family options when you need them.

Our attorneys at Pearson Bollman Law are happy to help you, give us a call today at 515-727-0986 for a free initial consultation.

The attorneys at Pearson Bollman Law practice in the areas of estate planning, probate/trust administration, special needs trusts, and elder law, which includes Medicaid and VA Pension Planning.  If you have any questions please call us at 515-727-0986.

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