Durable Power of Attorney
A Power of Attorney (POA) is a document whereby you give someone (referred to as your “agent”) written permission to help you now or in the future regarding financial decisions while you are living. A Power of Attorney is not valid once you die—it “dies” with you and then your Executor or Trustee take over.
A POA is durable if it states that it will remain in effect regardless of your subsequent incapacity. Connecticut has a standard POA form that covers most basic planning needs, but many estate planning attorneys add provisions that are unique to the given situation so that the agent will have even more power and authority than the standard form provides.
To understand the difference between a POA and a durable POA, click here.
You should only name someone in a POA if you have full, total and complete trust in the person because a POA is a very powerful document.
In a financial planning and Medicaid context, it is best to give a POA that conveys the broadest possible authority.
Oftentimes the Power of Attorney will give the agent the ability to make gifts of your money—this is a very useful provision, but must be tailored to your individual situation and family structure. Without an express gift- making provision, it is very difficult to transfers assets to your beneficiaries to reduce taxes or to protect your assets from nursing home costs, even though this is what you would have wanted.
Even so, gift giving provisions should not be automatically included in all POAs without first pondering the need and ramifications of such a power.
Other powers recommended include:
- Dealing with the State of Connecticut and the IRS on all tax matters, income and gift taxes
- Accessing safe deposit boxes
- Changing domicile
- Creating, funding and requesting distributions from revocable and irrevocable trusts
- Changing beneficiary designations on life insurance, annuities, and retirement plans
- It is also wise to add a paragraph to the POA stating that, unless the third party has actual notice of revocation, they may rely on the agent's authority and include a hold harmless or indemnification of the third party