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Power of Attorney Explained

Power of Attorney Explained

Is it time to have a conversation with your parent about financial power of attorney? There is no bad time to have this talk. As parents and their adult children age, the way they think about the future changes. Many people ponder the benefits of designating an agent to handle their financial concerns either immediately or in the future, as needed. But too often, thinking about it does not translate into talk or action until complications such as illness or incapacity arise.

At Oasis Senior Advisors, we recommend having a conversation about your parent’s financial future and the value of a power of attorney sooner rather than later. We are happy to help you understand the many benefits of selecting a trusted family member or friend to take on the role as an agent for your parent or parents. Reach out for a free consultation by filling out our web form or calling us at 475.619.4123 or 914.356.1901.

How Can Designating a POA Help?

Many older adults decide at some point to add a family member to their bank accounts, believing that will streamline matters in case of disability or illness. They may think that because their spouse is also on their house deed, they are both protected from being shut out of decisions about the home. Unfortunately, many people are misinformed about the difference between co-ownership and power of attorney. They may not realize how helpful and necessary it is to designate a financial power of attorney (POA).

Consider the following: home and other properties, bank and investment accounts, retirement accounts, and income stream. See below for some basics about securing the responsibility and safe management of your parents’ financial interests.

  • Home and other properties. If a property has two (or more) owners, such as spouses or a parent and adult children, each person with a name on the deed only has control over their own interest. If a couple or family wishes to sell, everyone’s signature is required. If someone has become incapacitated without setting up a financial POA and cannot execute the necessary terms of a sale, the only recourse is for another party to seek a conservatorship over that person’s interest in the property. That process can be time-consuming and stressful for everyone.
  • Bank and investment accounts. Unlike property ownership, anyone on a bank or investment account has the legal authority to manage all aspects of the account. Many spouses have joint accounts, as that makes daily life much simpler. If one partner predeceases the other, there does not need to be any transferring of the departed spouse’s interest. Parents often put one of their adult children on their accounts to make it easier for that child to support the daily bill-paying and account balancing. This seems like a good plan, but it can lead to problems.

For example, if an adult child is added to someone’s investment accounts, they appear as an owner of the account. This can have tax ramifications for that person who does not wish to be liable for obligations associated with those assets. It could also become vulnerable to a claim if the adult child entered into divorce proceedings.

Conversely, family dynamics can become strained, despite everyone’s best intentions. For example, if a nearby son is added to his parent’s account to make things simpler, there could be misunderstandings about the parent’s intentions. Were the contents of that account meant to be a gift for that son and not included in the will that divides other assets evenly? Was it compensation for services?  In this case, if the parent dies, the son is the owner of the account and all its contents.

We realize you would never add anyone to your parent’s accounts that you did not trust but remember that someone who shares ownership of an account has access to the account for any purpose. Financial hardship can lead to poor decision-making. It would be hard to prove that the use of the funds by the joint owner of an account to pay his or her debts was not a legal use of the money.

  • Retirement accounts. For understandable reasons, retirement accounts are figuratively glued to a single individual. Management cannot be legally shared with anyone else without a financial POA. Even if all your parent’s assets are in a trust, the trustee will not have access to the retirement accounts without a power of attorney.
  • Income stream continuity. In the event that your parent becomes incapacitated, you want to make sure that their income stream is not interrupted because of a missing POA. If you have the financial POA, you can ensure that any source of income is properly deposited and accessible to pay bills and necessities. The POA gives you the ability to endorse checks, authorize electronic payments, and more.

Oasis Can Help As you work with your parent on their estate planning, Power of Attorney is a vital piece of the puzzle. Oasis Senior Advisors is here to help because we have been there ourselves. We also have access to a deep bench of experts and specialists to refer you to for specific needs. Reach out today and let us help. Call 475.619.4123 or 914.356.1901 or fill out our easy online form.

Oasis Senior Advisors


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Paul and Susan Doyle

Certified Senior Advisor®

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