Many couples get advice on the importance of advanced directives such as a living will or a durable power of attorney to accompany their will or trust. But as part of the estate planning process, it is also important to consider naming a financial POA while assessing their financial assets.
It may come as a surprise that 60% of adults in the United States do not have an end-of-life plan in the form of a will or trust. Fortunately, 81% of elderly Americans 72 years old and older, and 58% of baby boomers aged 53-71, do have some kind of estate-planning document.
What or who is a power of attorney?
A power of attorney (POA) is a document that allows one person, called the agent or attorney-in-fact, the legal authority to act on behalf of another, called the principal. The agent can be a friend, relative or a financial or legal professional. Above all, the agent should be trustworthy, organized and knowledgeable in legal and financial matters.
A POA is a form of advanced directive like a living will, and usually accompanies the principal’s other estate planning documents. There are several kinds of POA’s, including durable medical power of attorney, durable financial power of attorney and limited power of attorney.
The durable medical and financial powers of attorney grant the agent powers, respectively, to make medical or financial decisions on behalf of the principal. A limited power of attorney has restricted powers and is often used for specific purposes, such as proxy signings for real estate or investment transactions.
How does a durable financial power of attorney work in Missouri?
In Missouri, a durable financial power of attorney must be signed in the presence of two or more witnesses, and it is revocable by the principal. State law also allows a springing power provision in the document, which means that it goes into effect only on the mental or physical incapacitation of the principal.
A durable financial power of attorney is drawn up while the principal is competent, and directs the agent to manage the financial matters of the estate, including investments, the paying of bills and the signing of documents. It is important to note that this kind of document, now often included as part of estate planning, has replaced the more complicated and expensive process of conservatorship.
In making an estate plan, it is important to consider not only the future medical challenges you may face but also the future financial viability of your estate.