11/17/2014 - Does a Power of Attorney Really Work? (Part III)

What can you do to make sure your power of attorney will be honored?

Ask your bank, brokerage house, IRA or other retirement plan provider, and insurance companies if they will honor your power of attorney and ask for their response in writing. If they say they will only honor powers of attorney on their own forms, obtain copies of those forms and provide them to your attorney to make sure they are completed properly.

Make sure that your power of attorney is renewed periodically; I suggest every five years, to make sure it will not be considered "stale" by third parties asked to rely on it. If you spend your time in various states, set up durable powers of attorney that comply with the state laws in each place. Financial institutions are supposed to honor out-of-state documents but if you are dealing with a bank teller, he might not recognize and be willing to accept an out-of-state document.

Consider requiring consent from other persons, perhaps your other children, when the agent appointed in the power of attorney wants to undertake big financial moves such as selling your residence or making large gifts.

Consider setting up a revocable inter-vivos trust to provide for the management of assets during a period of incapacity or disability in case the power of attorney approach breaks down and third parties will not accept the agent's authority.

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Until next week,
- Patti Spencer