Reciprocal Powers of Attorney--They can be useful but many times require structure

I generally recommend reciprocal Powers of Attorney to all couples for whom I prepare Estate Plans. My 44 years of experience in the estate planning and probate area have convinced me that a properly drafted Power of Attorney can be a powerful cost-saving instrument in the event that a husband or wife sustains a stroke or other crippling disorder that limits their ability to function at the level they functioned prior to the disabling event. The Power of Attorney can permit the surviving healthy spouse to act for the disabled spouse without enduring the expensive and time-consuming process of being appointed the disable spouse’s legal guardian.

So far, so good, for many of the married couples I do Estate Plans for. What if the marriage is not in great shape and one of the spouses is contemplating divorce? Certainly, that person would not want to give a Durable Power of Attorney to a spouse with whom he or she does not see a long range future. Those situations require some delicacy, and generally result in NO Powers of Attorney being a part of the Estate Plans. That is not usually a deal-breaker, but it does change the way the entire estate planning process goes forward, if at all.

The fragile marriage situation is not the most typical resistance I see for executing reciprocal Powers of Attorney. I often run up against either painfully conservative individuals who do not want to cede any of their powers or choices to another, even their spouse. There are other situations where a person loves his or her spouse but just does not believe that the spouse in question has the financial acumen to be armed with a Durable Power of Attorney with its plenipotentiary powers. Over the years, I have worked out solutions to this more typical conundrum facing a spouse who just isn’t sure about giving his or her spouse unlimited power.

I suggest to the reluctant spouse that the following approach be taken:

1.       They execute an ample number of Powers of Attorney.

2.       Instead of giving the documents to their spouse, they place them in escrow, with me, or some other trusted individual or institution, with a letter of instructions.

3.       Among other things, the letter of instructions sets forth the conditions or situations where the person holding the Powers of Attorney can release them to the spouse. There are many gradations of disability which can trigger the release.  They can be articulated in the letter of instructions.

4.       The positive aspect of this approach is that it gives the security of having Powers of Attorney available, without their actually being usable until they are really needed. Over the years, I have had clients come to me after setting up elaborate protective provisions, and tell me to make immediate release of the Powers of Attorney.