SALT LAKE CITY, UTAH – Important things that most estate planning attorneys do not tell you. If you have had estate planning documents prepared for you, you may have noticed that your estate plan includes a Financial Power of Attorney (“FPOA”). Based on my conversations with prospective clients, I have found that the FPOA is one of the most misunderstood documents. Most people don’t understand why they have it and what purposes it serves.
One frequent question that I receive from clients after the passing of an individual who executed an FPOA is: “I am the ‘agent’ under the FPOA, so I can handle it.” The FPOA is often mistaken as the document that grants authority to handle financial affairs after someone dies or to be used to pay someone’s bills during times of incapacity. However, that’s not really what the FPOA is designed to do. In fact, if you’ve transferred your bank accounts into a Trust, the FPOA has no authority over those Trust accounts.
So, if you are wondering what an FPOA does, here are a few things that it will address:
- It Allows an individual to sign financial documents for assets held outside of the Trust
- Power Bills
- Insurances
- Qualified Retirement Plans
- Handling financial aspects of long-term-care
- Addressing issues with Medicare or Social Security
Here are a few items that an FPOA does not do:
- Work after the individual who signed the FPOA has died
- Sign, sell, etc. assets held in Trust
- Make healthcare decisions (Note: this is a separate document)
So, why do you need an FPOA, and is it even necessary if you have a Trust? As you can see above, the FPOA is useful in a number of situations. Where I have seen the most need is managing IRAs, 401ks, employee benefits, Social Security, Medicare, long-term-care, etc. These assets and resources cannot be managed by a trustee of a Trust. A properly drafted FPOA can help address these financial assets and resources. Last week, I assisted my parents, by using their FPOA, to have my father be released from a rehab facility, to square up the bills associated with his care at the rehab facility, and then to be admitted to a memory care facility. The FPOA was used to negotiate the contractual issues associated with level of care, long-term-care pricing and other financial issues associated with his cost of care.
If you have any questions about your Financial Power of Attorney, the true purpose of your Financial Power of Attorney, and how it is a crucial part of your personal estate plan, or if you have any questions about your healthcare documents, feel free to contact us for a complimentary review and consultation. Please contact Kent Brown at Strong & Hanni by either phone at (801) 532-7080 or email at: kbrown@strongandhanni.com or go to https://activerain.com/profile/kbrowndad for additional information, or my personal Strong & Hanni webpage at: https://strongandhanni.com/attorneys/attorney-kent-brown/
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