New York’s powers of attorney documents can protect elderly loved ones
Powers of attorney documents can serve as a way to protect the finances of the elderly, helping to better ensure their efforts to save, invest and plan are not diminished.
It is difficult to watch the funds that parents have worked hard to accumulate dissipate. They plan, save and invest to help ensure that funds are available to help provide the care they may need in their sunset years and also build wealth to transfer to beneficiaries. Unfortunately, without proper planning these proactive measures can fail. Without a well chosen power of attorney, the funds could be lost.
A real life example
A recent article in Forbes discussed this issue. The article shared the story of a widow whose funds were squandered by her daughter. The daughter meant well, but was not financially savvy. As a result, the mother’s assets, which included a family home, two investment properties, retirement accounts an estate worth well over $2 million, was depleted to $50,000 in a matter of years. At that time, the daughter, at the threat of legal action from other family members, agreed to a meeting with an estate planning attorney. The legal professional was able to structure a plan to make the most of what was left and help ensure the widow had the finances she needed to care for her for the expected remainder of her life. However, the fiasco could have easily been avoided. The story can serve as a lesson to others in similar situations: take proactive steps to help ensure a loved one’s efforts are not for naught.
More on New York law and powers of attorney
One powerful option to avoid a similar fate is the powers of attorney document. New York state law defines a power of attorney as the person who (the principal) chooses (your “agent”) to have the authority to spend money and sell or dispose of property during your lifetime without telling you. This person must act according to any instructions provided by the principal, and the principal does not lose the authority to act on his or her own behalf. When instructions are not present or do not cover a certain scenario, the person designated as the power of attorney must act in the principal’s best interest. This legal tool can be used to place someone skilled with finances in charge of the assets in a situation like the one outlined above.
The principal can revoke this power at any time, for any reason, as long as the principal is “of sound mind”. If the principal is no longer of a “sound mind”, the court can remove an agent that is found to act improperly.
Importance of legal counsel
It is important to note that this is just one of many legal tools to include within an estate plan. This document specifically covers financial decisions during a principal’s life. Additional documents, such as a health care proxy to provide the power to make health care decisions, are also recommended.
Determining which documents and tools are necessary to meet your needs depends on each individual situation. As a result, it is wise for those who are interested in putting together an estate plan to contact an experienced estate planning lawyer.