Estate Planning Mistake #4: Agent Authority is Too Narrow
This article, number four in our series about do-it-yourself estate planning mistakes, explores another common error we see among people who create their estate planning documents using forms downloaded from the internet.
If you want to make sure that your estate planning documents do what you want, you need to pay attention to the details. In this article, we talk about one detail that is often overlooked: the risks of limiting authority in a financial Power of Attorney.
The Georgia statutory form Power of Attorney seems like it would provide all the powers an agent would ever need. Unfortunately, it doesn’t, as this article explains.
That’s not the only problem. In the Georgia statutory form, these is a section where you can choose which types of authority you are granting to your agent. Broadly speaking, there are two categories of authority: general and specific. On the form, there’s a list of the types of authority granted to your agent under each category. The form asks you to initial next to each type of authority to indicate that you grant this authority to your agent.
General Authority includes things like doing your taxes, dealing with your real estate, and handling your personal property. Most people initial beside the last item, "all preceding subjects," to include every item in this category.
It's a different story when it comes to the list of authorities that fall under the specific authority category. Many people don't initial any of these items, which makes the statutory Power of Attorney even more narrow. We see this on many of the statutory Power of Attorney forms that our clients ask use to review, even forms that other attorneys helped them prepare. Some attorneys always advise their clients to authorize the bare minimum of powers.
Why does this happen? While there are probably as many reasons as there are people, they all boil down to lack of trust. Many people are afraid of being victimized by the people they name as their agents. They are afraid that the agents will abuse their authority. They let the fear of being taken advantage of overshadow the fact that their agents need tools and authority to take care of them if they become incapacitated.
We see this situation quite frequently. When a person shares this kind of concern with me, I tell them that if they have any hesitation about naming this person as agent, or if they think there's any chance that the agent would use their financial assets to do anything other than take care of them, then don't name that person as an agent. The agent on your financial Power of Attorney needs to be someone you completely trust.
If you have any questions about how to balance your need to give your agents the powers they may need to take care of you—without creating the conditions for financial abuse, Kimbrough Law can help. Call us at 706.850.6910 to schedule your confidential consultation.
