You want to take care of your affairs no matter your health. While you know you should have a power of attorney, you may not know the extent of the role’s abilities.
The American Bar Association answers various questions about power of attorney. Learn which powers to grant your agent to make both your lives easier.
Amend or create trusts
The person you choose to make decisions in your stead becomes your “attorney-in-fact.” This role involves carrying out your estate plan, which could mean changing or creating trusts in your lifetime. Your designated individual could also shift assets to a trust you established. Your agent may change asset ownership, which could affect distribution. The extent of the attorney-in-fact’s legal reach depends on state law. Ensure your power of attorney clarifies which of these abilities your attorney-in-fact possesses.
Spell out whether your attorney-in-fact may make gifts in your stead. An example of a gift is annual exclusion gifts to your children. Also, draft your power of attorney so your agent does not pay unnecessary gift taxes.
Depending on when you create your estate planning documents, you may want to change existing agent powers. Washington’s current estate tax laws may convince you to either exclude or maintain the power. For Medicaid planning, some individuals do limit their agent’s gift-giving powers. Regardless of your agent’s powers, consider reviewing your estate plan periodically.
Your power of attorney and other estate planning documents should protect your interests. By giving your attorney-in-fact the right powers, you better ensure the person follows through with your desires.