Do I really need a Power of Attorney?
There is no legal requirement that you execute a Power of Attorney, financial or otherwise. You could go through life never having to give someone else authority to act on your behalf. But, what are the chances that you will go through your whole life never needing someone to step in and act on your behalf even if it’s just for a short period of time? That you will never find yourself in the hospital unable to transfer money to cover bills or unable to communicate your medical decisions? That you will always maintain you mental faculties? Probably pretty remote.
So what happens if you never appointed an agent to act on your behalf? The Court will have to intervene. A petition will be prepared to have you declared incapacitated and a guardian will be appointed to make decisions on your behalf. Once you are declared incapacitated, you can no longer make legally binding decisions for yourself. The Court will now require your guardian to file annual reports of all of your assets and income. This is an intrusion most people want to avoid. Preparing a Power of Attorney and appointing someone to act as your agent for financial and medical decisions while you are competent avoids involving the Court in a guardianship process.
What happens if my beneficiaries die with me?
This can be an important question for some clients. In some cases, we have several different contingency plans in the Will and go through all of the plans and then some. In these cases, things can get technical. We look to all of those “other” clauses in the Will that have provisions for survival and simultaneous death. We need to look at the order of death. When all else fails, we look to the intestate statute. (Check back in a few weeks for more on the intestate statute.) If the intestate statute is exhausted and we still haven’t found a long lost relative, your estate can go to the state. It is this provision that stops some of my clients in their tracks. One way to avoid this is to name a charity as a backup. While it is possible that there could be some tragedy that could cause the death of your entire family, it is much less likely that a reputable charity will stop existing. And, if by some crazy series of events, even your favorite charity ceased to exist, there is something called a cy-pres petition that ensures the money goes to a charity of similar intent, preventing it from reverting to the state.
Although this may not be a significant concern for a lot of people, it underscores the importance of proper estate planning. Everyone has a unique set of circumstances that should be reviewed with an estate planning attorney who can provide guidance to ensure your wishes are carried out no matter what happens.
Lindsay Schoeneberger is an attorney at Russell, Krafft and Gruber, LLP in Lancaster, Pennsylvania. She received her law degree from Widener University School of Law and practices in a variety of areas, including Estate Planning.