In a Power of Attorney, you select one or more people (called an ‘agent’). The agent is given the right to sign documents and transact business on your behalf during your lifetime. If you select more than one agent, you can specify if each agent can act individually, or if the agents must agree and act together. You can also select alternate agents. If you want to grant authority to your agent(s) to make gifts of over $500 per year to any done (often part of Medicaid planning or to help immediate family members in emergency situations), you must also sign a statutory gift rider.
The Power of Attorney is a powerful document and should only be given to people whom you would trust to do business and day-to-day transactions on your behalf as if it were you.
The Power of Attorney is valid as soon as the document is signed until your death unless you state an event or date for its termination. You have the option to revoke the power at any time. There are a special set of procedures that must be followed to properly revoke this power.
- The grantor is the person who is giving power of attorney to someone else.
- An agent is a person who will receive the power of attorney to act on your behalf. Sometimes the agent is called the ‘attorney in fact.’
Objectives/Goals of the Power of Attorney:
- Assures that there is no family dispute as to who should handle your affairs.
- Enable the agent to act on your behalf should you become disabled or otherwise unable to perform in that function.
- Allow a family member or trusted individual to assist with the day-to-day affairs on an as-needed basis.
- Enable the agent to make tax-free gifts (up to the federal annual exclusion), which allows for Medicaid planning.
- Permit agent to make unlimited tax-free gifts for medical and tuition expenses for each intended donee.
- Empower the agent to act for you in tax and financial matters, including paying health expenses without being responsible for the debt and to change your domicile (permanent residence).
- Permit agent to transfer assets to your revocable trust for asset protection.