A Power of Attorney for Property (“POA-Property”) is a basic estate planning document that everyone should have.
With a POA-Property you authorize someone to be your agent to do “Property” related transactions on your behalf such as banking, paying bills, filing your tax return, etc. if you became mentally incapacitated and could not do those things yourself.
If you don’t have a properly signed POA-Property – then a family member or friend will have to file a petition in court to be named as the “Guardian of Your Estate” if you become mentally incapacitated.
Here are just a few key decisions you need to make when completing your POA-Property:
1. Who should you name as your Primary POA-Property Agent?
The person you choose to be your Agent should be someone you trust to do what is in your best interest if they would need to act on your behalf. Ideally, they should be organized and be able to communicate with others well. Ideally, they should be someone that handles their own financial affairs properly.
Many people will name their spouse as their primary Agent. If there is no spouse, then most people choose a family member or a close friend that they trust be their Agent.
2. Who should you name as your Successor Agents:
It is very important to name Successor Agents in case your Primary Agent is not able to act on your behalf. In most cases it is recommended to have at least two Successor agents named in your POA-Property as back-ups to your Primary agent. If none of your named agents can act on your behalf, then it is as if you don’t have a signed POA-Property at all.
3. Do you want your Agent to be able to change your Beneficiary Designations or be able to make Gifts on your behalf?
The Illinois Statutory POA Property form is meant to give your Agent very broad powers over your assets if they need to act on your behalf -- but there are two things your Named Agent does not have authority to do unless you specifically write these powers into your POA-Property document:
Change Beneficiary Designations: Your Agent cannot change beneficiary designations to life insurance policies, bank accounts or estate planning documents unless you specifically write that power in your POA-Property. There are many factors that should be considered whether or not to grant your agent this power and everyone’s case is unique and different.
Give Your Property Away: Your Agent cannot “give” your property away unless you specifically write that power in your POA-Property. Again, there are pros and cons to authorizing your Agent to give your assets away if you become mentally incapacitated. This decision should only be made after consulting an experienced estate planning attorney.
4. When do you want your Agent to have the authority to act on your behalf?
Upon You Agent Obtaining a Doctor’s Note or Court Order Confirming You Are Mentally Incapacitated: By choosing this option you are requiring your agent to take you to a doctor (or court) to evaluate your mental capacity and confirm that you no longer have the mental capacity to manage your financial affairs. This is an extra step that your agent would need to take before they could access your bank accounts or sign documents on your behalf.
Upon Signing the POA Document: This means that your agent could start managing your financial affairs without having a Doctor’s Note or court order confirming that you are mentally incapacitated. You are trusting your Agent’s judgment to know when you could no longer manage your own affairs and when they would need to act as your Agent. Technically you do not even need to be mentally incapacitated for your agent to act on your behalf if you choose this option.
Each person needs to weigh the pros and cons of each of these decisions to create a Power of Attorney for Property that is best for them. At the Ritchie Law Office, Ltd., we walk our clients through these decisions (and others) so that they have a Power of Attorney for Property that is customized to their specific needs and situation.
This article is a service of Attorney Chad A. Ritchie and the Ritchie Law Office, Ltd.
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