Power of attorney laws may not look the same in each state.
Accidents happen all the time.
Sometimes, they are small and only a minor inconvenience.
At other times, accidents and illness can lead to short-term or long-term incapacity.
According to a recent limaohio.com article titled “When ‘anything and everything’ does not mean anything and everything,” it is important to be prepared for the possibility of incapacity in the future.
Should you become incapacitated, you will need another person to make financial and medical decisions on your behalf.
The cornerstone of incapacity planning?
Power of attorney documents.
What is a power of attorney?
It is an estate planning document where one person (the “principal”) grants authority to another individual (the “attorney in fact” or “agent”) to handle the affairs of the first person.
While they do share certain features in common, the laws governing powers of attorney are not the same across states.
Although a comprehensive power of attorney may grant the agent the ability to do everything, it does not always mean a person can do anything.
States can limit the roles and responsibilities of an agent granted power of attorney.
Some states require an explicit statement of certain powers such as amending, creating, revoking, or terminating a trust.
Changing beneficiary designations on life insurance policies or accounts is also commonly disallowed unless specifically authorized.
Another limitation is making gifts.
Do you want to authorize your agent to be handle these matters or do you want to limit the scope of authority?
Either way, you will need to work with an experienced estate planning attorney in your state of residence.
Another consideration is a limitation made on gift amounts when giving your agent such authority.
The allowable gift amount is currently $16,000 per recipient per year.
Express permission to exceed this amount must be given to gift a larger sum.
Although these limits seem restrictive, the purpose is to provide helpful boundaries to power of attorney authorities.
You also do not have to rely on the state law to impose restrictions on the authority granted in a power of attorney.
You can choose to make the powers broad or limited.
Also, if you spend significant time in more than one state (e.g., you “winter in Kansas” and “summer in Florida”), then there may be wisdom in having a power of attorney prepared by separate attorneys is each state.
Should you elect to do this, make sure the respective legal documents do not contain language cancelling one another!
By working an experienced estate planning attorney, you will be able to create power of attorney authority tailored to meet your specific needs.
Reference: limaohio.com (April 30, 2022) “When ‘anything and everything’ does not mean anything and everything”