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One common estate planning misconception is when Powers of Attorney start and end. A Power of Attorney is a tool used to grant authority to someone to act on your behalf in case they need to. Powers of Attorney can start or be effective either immediately or springing.

Health care Powers of Attorney, which allows someone to make health care decisions on your behalf, are effective only if you are not able to make decisions for yourself, whether that is because of a physical ailment, such as being unconscious, or a mental illness.

A financial Power of Attorney on the other hand can be effective immediately or springing. A financial Power of Attorney allows someone to make financial decisions on your behalf. If effective immediately, that means the moment it is signed the person can start making decisions on your behalf. If it is springing, the person can only make decisions on your behalf if you are unable to, again such as if you are unconscious or have a mental illness.

Whether to make it effective immediately or springing is an important decision. Most people choose to make if effective springing because they only want someone to make decisions on their behalf if they are unable to; however, some people do decide to have it effective immediately so their agent can make decisions right then and there and going forward. A lot of times this may be in the case of a person who is elderly or travels a lot.

When the Power of Attorney ends is another misconception. The Power of Attorney ends immediately upon death. That means your agent no longer has authority to make financial decisions on your behalf, whether that means writing checks, paying bills, or getting funds out of your account. As soon as you pass away, that authority transfers to the personal representative or executor under your Will or the trustee under your trust. If not planned properly, that could mean that the personal representative or executor may not have access to any of the decedent’s funds until a probate process is opened and the court grants that personal representative or executor with the proper authority to access those funds to pay your bills and final expenses, meaning weeks if not months of delay. Thus, proper planning can solve all of these issues.

If you have any questions regarding your Powers of Attorney or you do not have any please contact me.

-Matt

Currently the news is packed with stories about Lamar Odom’s recent “long weekend” and resulting medical problems (just Google it, you’ll find plenty of stories). The pertinent facts, however, are this: 1) Lamar Odom is unable to make healthcare decisions for himself; 2) he does not have a Living Will specifying what his healthcare wishes are; 3) we are unaware if he has a health care power of attorney; and 4) his recent divorce has not yet been finalized because of a backlog in the courts. Whether he has a healthcare power of attorney that just hasn’t been updated or he does not have one at all (and, thus, the law controls), his soon-to-be ex-wife, Khloe Kardashian, is responsible for making his healthcare decisions.

Having an Estate Plan (and an up-to-date estate plan) is essential to ensure that your wishes are carried out – whether it be who receives your assets after you pass, who controls your finances if you are unable, who makes your health care decisions if you are unable, etc.

When a major life event occurs, you should ALWAYS make sure to discuss the impact that life event may have on your estate plan with an experienced professional. Otherwise, like in the case of Lamar Odom, your soon-to-be ex-spouse may be making healthcare decisions for you (and possibly inheriting part of your estate if you pass away without an estate plan or an up-to-date estate plan)!

While there are plenty of lessons to learn in the recent news concerning Lamar Odom (again, just Google it), not having an estate plan or an up-to-date estate plan is definitely one that most people are guilty of themselves and can easily be remedied by speaking with an experienced professional.

For more thoughts on this issue, check out this article written by David H. Lenok and titled “Odom and Kardashian: Why Living Wills Matter”

I hope this helps!

-Matt

Crummey Estate Plan

All Things Estate Planning – Putting You "In the Know"

When do Powers of Attorney Start and End?

Lamar Odom: A Lesson to Learn