There often becomes a point, due to sudden illness or gradual cognitive changes where managing finances, working on taxes, paying bills, dealing with the web of health insurance rules and claims, investing and managing retirement money becomes over-whelming, burdensome or not possible. Perhaps the person is able to understand and wants to be informed about money decisions but just isn't able to completely handle to miniscule details of bills and money. Or perhaps a sudden change in health renders the person completely unable to have any involvement in managing bills and finances.
A well-drafted, enhanced property power of attorney offers the person the opportunity to name an agent, often a trusted family member, to handle their finances if the person is not able to manage their finances on their own. However, the twist with the document, along with many planning documents, is the document must be signed when the person is able to make good decisions.
Once someone, for example, has a stroke or is in a car accident that renders the person unable to make cognitive decisions, it is too late to sign the document. Many children have been willing and eager to help an aging parent by taking over their finances only to realize that the bank, the insurance company, the mortgage company, and other financial institutions will not talk to them without a power of attorney. Often these same children will then attempt to get a power of attorney only to realize that their parents cannot sign the power of attorney due to the fact that they lack legal capacity to now sign legal documents, due to their condition. It becomes a circular problem. The adult child needs the power of attorney to help the parents, since the parent can't manage on their own. But the parent can't sign the power of attorney for the same reason it can't manage their finances.
Some people will do "a wait and see" with getting the power of attorney. Adult children will say things like, "mom is slowing down a bit mentally but will just wait and see how she does before seeking the power of attorney." Often this is because the family member, often an adult child, is so busy helping with the parent, managing his or her own family life and feels too busy to take care of it. The problem is without this document, if a person becomes unable to manage finances and unable to sign a property power of attorney, the family member will end up with no alternative but to go to court to attain guardianship. Attaining guardianship is a costly and time-consuming process. In addition, the guardianship court is involved in every financial decision made for the care of the person during the entire guardianship. This oversight can be frustrating and exhausting for the family members. The expense, time, and frustration can all be avoided with a well-drafted enhanced property power of attorney.
Consequently, it is critical that an Enhanced Property Power of Attorney be apart of planning.
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