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Should I use a durable power of attorney to manage assets for my loved one?

Posted by Gayla K. Austin | Jan 03, 2021 | 0 Comments

My client, Mrs. K.,  is living in her own home, and while she knows she is getting older--she is in her 80's--she told me she really wishes to remain independent and live in the house she owns.   Her husband has passed away, and so has her son.  Mrs. K has lived in Wyoming all of her life and has been active in her community, and loves her pets and creative activities.  Mrs. K. knew she needed to make a plan for incapacity, and an overall estate plan.  She decided to designate an agent to manage her affairs, and made a general durable power of attorney giving her cousin authority to manage her affairs.  One thing Mrs. K. and her cousin didn't realize about the form they used is that the power of attorney gave her cousin broad powers to act at any time--not only on incapacity or death.   This is not what Mrs. K. intended and neither her or her cousin realized the effect of the document. 

In 2017, Wyoming adopted the Uniform Power of Attorney Act in Wyo. Stat. 3-9-101 et al.    Mrs. K. and her cousin had "heard of" the use of a general power of attorney and used a printed form which turned out to give broad powers over every asset during Mrs. K's life, which is not what she intended.  Fortunately, there has not be any abuse or misuse of the "power" but unfortunately, too often the general power of attorney is used to access money and control assets for fraud or theft.  

What Mrs. K. didn't know is that a revocable living trust can be structured to designate a successor trustee to manage assets held in the trust during the settlor's life while competent.   The terms of the trust determine how and whether the trustee can allocate trust funds, and the power inside a trust is much more flexible that most of my clients realize. 

Now, Mrs. K. has a financial power of attorney for her affairs that can only be used on her incapacity or death.  This document is used together with her trust agreement.  

Some of my other clients have simply put a child on their bank account or other asset title with the thought that the child can take care of things when they get sick and that the child will use the assets to pay bills and carry out the terms of the parent's desire estate plan after death.  Here's a link on how to own your bank account.  

However, please know that joint name arrangements can give the creditors of the child access to those assets, as well as permitting the child to claim full ownership at the death of the parent without obligation to pay all of the bills with the joint assets. 

That is why is is best to consult with an experienced estate planning attorney to plan for incapacity and how that plan integrates into your entire estate plan.  I will review your current documents, or make a resolution plan for you if you don't have documents.   Please call 307.200.1914 for a free telephone consultation or videoconference.  

About the Author

Gayla K. Austin

I enjoy helping clients put it all together with legal advice regarding real property, estate planning and business entities.

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