Revocable Power of Attorney

A revocable power of attorney is a legal document, which entitles another adult to be your financial advocate. It is revocable because it is can be changed. This is not the same as a durable power of attorney, which stays in effect even if the person becomes incapacitated, mentally ill, or senile.

Protect Your Family's Money

Protect Your Family

A revocable power of attorney will protect your family since your assets will not fall into probate court; without a power of attorney, there would be no way to put your final will into order. Thus, all your assets would fall under the hands of state law and the probate court.

Protect Yourself: Keep It Revocable

Keep Things Fluid: Keep It Revocable

Since a revocable power of attorney can be changed, if your chosen financial advocate changes between now and the time when the legal document springs into effect, you can pick a new individual to handle your affairs.

When Does the Document Go Into Effect?

When Does It Become Active?

The legal word that your attorney may use when drafting a revocable power of attorney is "spring." A document "springs" into effect, which means that it becomes legally valid and empowers the individual to act on your behalf. You get to decide under what situations a power of attorney goes into effect. For example, people have included provisions that stipulate a power of attorney does not go into effect until a week or so after death, so that during the funeral, the legal agent is not obligated to act on your behalf as soon as the mourning period begins.

What Happens Financially Without A Power of Attorney?

Avoid Taxes

It is important to realize that without a power of attorney, your estate will not be properly administered. That means that if you have not properly determined a will, your assets will go into the probate process and fall into unnecessary federal estate taxes.

Public Concerns

Probate Court: Your Worst Financial Enemy

Your estate process may become a public spectacle if you do not have a power of attorney. The probate process is fully public; therefore, your local community will have access to your estate proceedings through the court system. This could have dramatic effects on your legacy. Most people do not want their friends to know about family tensions and the arguments over money that often arise during the probate process.

Conclusion

It Is Your Money: Keep It In Your Family

It is an essential part of the estate planning process to have a power of attorney document that can be altered as the future unfolds; thus, a revocable power of attorney is definitely worth the cost of having an attorney write one on your behalf.

References

• "Kiplinger's Estate Planning"; John Ventura, 2008