POA’s are important estate planning tools that can be utilized to manage your personal, family, and business assets if you become ill or incapacitated, temporarily or permanently.
While most people think of a will when they think of estate planning, other estate planning tools including a POA are often considered equally or more important. A will comes into effect after you die. A POA on the other hand, is a tool that can be used while you are living, but ceases to be valid after you die. In general terms, a POA provides a tool for you to identify how your assets are managed, and who manages them, if you need assistance while you are living.
If you are making a valid POA, you are considered the principal. The person that you assign to manage your assets, if needed, is considered the agent. You can also name alternate agents in your POA in case your named agent is unable or unwilling to serve as agent for any reason. The law allows the principal to grant broad authority to an agent under a POA, and also to limit the power of authority of an agent under a POA. Typically the principal utilizes the POA to only grant authority to the agent if the principal becomes incapacitated, temporarily or permanently. However, the principal also has broad powers to grant authority to the agent immediately and without any conditions. Typically the principal also makes the POA a durable POA instead of a non-durable POA. In being a durable POA, the POA remains in effect if the principal becomes incapacitated. A durable POA is valid for the lifetime of the principal, unless the principal limits the duration of the POA, or revokes the POA.
As previously stated, the principal has the ability to grant or limit authority of the agent. Authority granted can include authority to manage assets including real property or real estate, and personal property including money, bank accounts, investments, stocks, bonds, retirement accounts, 401k’s, IRA’s, the remaining amounts of an annuity(s), vehicles, and personal belongings. Authority may also be granted or not granted to the agent for gifting the principal’s property. Additionally, authority may or may not be granted to the agent to change beneficiary designation on a principal’s last will and testament. Other items that may be addressed in the POA include collecting debts owed to principal, access to safety deposit boxes, authority to subscribe a real property deed, insurance decisions including Medicare and Medicaid, business transactions, tax matters, trusts, management of retirement plans, to disclaim property, and to generally manage the affairs of the principal.
A POA can be an effective part of business succession planning, especially in the instance where a business owner or business principal becomes incapacitated. Incapacitation may include Alzheimer’s and dementia. A POA is not just for elders or part of elder law estate planning, as accidents, disease, and incapacitation can strike young people as well as senior citizens. Incapacitated people may end up in a hospital for an extended stay, in a rehabilitation hospital, in an assisted living home, or with home nursing care or nursing home caregiving. A POA allows the principal to designate an agent and grant or limit the agent’s powers, while the principal is healthy and of sound mind. Without a POA, it can be difficult and time consuming for loved ones to get authority to manage assets through the court system. Businesses and assets of the principal can suffer loss without a POA, as well as families of the principal.
Access to digital assets including computers, digital storage devices, phones, email, online accounts, and cloud storage of pictures and files can be addressed in a POA as well. For more information on digital assets and access to them, visit the Digital Assets page at MentchLaw.com.
A POA in Pennsylvania must be signed and dated by the principal and notarized by a notary. The POA must also be witnessed / signed by two other adults over 18 years of age who are not agents under the POA nor signing for the principal. This is enumerated under Pennsylvania Title 20 Pa. C.S. Section 5601(b).
Through a standby guardianship document, custodial parents, a legal custodian, or a legal guardian, may assign a standby guardian for a minor child as defined under Pennsylvania Title 23 Pa. C.S. Domestic Relations Section 5611, Subchapter B. Standby Guardianship, Designation. The standby guardian becomes a guardian only on occurrence of the triggering event listed on the standby guardianship document. The standby guardianship document is separate and different from a POA, and should typically be a separate document, not part of the POA.
Attorney Kirk E. Mentch, Esquire