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Do you have a Power of Attorney? If so, great! Which one do you have? Most people respond and say “the regular one?” I’m going to give you the 1st distinction of estate planning. Most of you know the buzz words – Will, Trust, Power of Attorney and Healthcare proxy. We all know those words, but you most likely don’t know the rest of the story! What are these documents when I say the distinction between documents vs planning? When you have a Power of Attorney document you have a BLANK CHECK!
If I give you a blank check what can you take from me? Most people would say everything. The correct answer is whatever is in my checking account. Now, if I give you my Power of Attorney, what can you take from me? The correct answer is EVERYTHING! That would include my bank account, real estate, pension, life insurance and the list goes on.
Let’s say that I give my Power of Attorney to my kids. The first problem that I have is that I just gave them a blank check. Why is it a blank check? It is a blank check because it grants authority without any instructions. The second problem I have is that it is not powerful enough, especially in areas that I want to be protected. How many of you would want to give one kid the authority to the exclusion of all others? I have never met a client that wanted to do that unless they only have one child. For the rest of us this doesn’t work, so how will we bring it all together. We have to have instructions. This is where the difference between documents and planning comes in.
When you have a Power of Attorney plan you can create rules inside the powers. When you create rules inside your Power of Attorney you can provide exact details of what you want when you are no longer able to make those decisions for yourself. One prime example is you can tell your POA that if you are unresponsive and are showing no signs of improvement after 30 days, you would like to be taken off life support.
Make sure when creating your estate plan that you put a plan in place and not just documents. By creating a plan, you make sure that your wishes are being honored.