Ep. 197 – 10 Reasons Everyone Needs a Power of Attorney in Retirement
What if something happened to you and you needed somebody else to make decisions in your place? Do you have a durable power of attorney in place to make things easier for you and your loved ones?
A durable power of attorney is an essential estate planning document for when you become disabled or incapacitated. It allows somebody else to make decisions and transactions that you would normally do yourself.
In this episode of the Secure Your Retirement podcast, we explain the ten reasons why you need a power of attorney regardless of your age. Listen in to learn the peace of mind you will have knowing that everything will be taken care of if something happens to you.
In this episode, find out:
- You become incapacitated or disabled, and you can’t make any transactions.
- It gives you convenience when traveling, making things easier for the what-ifs that can happen.
- The financial decisions related to your health need to be part of a durable power of attorney.
- Have someone who can handle your financial affairs if you cannot do so.
- Give someone the ability to make real estate transactions on your behalf.
- Making gifts to fulfill your wishes if you don’t have the mental capacity to do so.
- Have someone to deal with all your tax matters if you’re unable to.
- A durable power of attorney can help protect your privacy.
- It helps avoid guardianship proceedings which saves time and effort.
- It provides peace of mind knowing that you have a backup plan if something happens.
- “The durable power of attorney would allow somebody else to be able to make simple transactions that you cannot do.”– Radon Stancil
- “A power of attorney makes it possible for privacy to be maintained in a scenario of incapacity or disability.”– Murs Tariq
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Here’s the full transcript:
|Radon Stancil:||Welcome back to Secure Your Retirement. Our podcast is all about this idea of, “How do I get to and through retirement, and do so with a peace of mind type of atmosphere?” And so we talk about a lot of different things. Today, we’re going to talk about something that, to be honest, maybe not, I’d say that it’s the most pleasant scenario, but yet it is something we have to think about, and that is a scenario where we may need a durable power of attorney. Now, if we need a durable power of attorney, a lot of times the reasons why are not that positive. Something’s occurred to myself, something’s happened that I can’t make some decisions, and so therefore I need to have someone in place. Throughout the episodes of the podcast, we have talked about a multiple of real life situations that occurred that created a scenario where a durable power of attorney was needed.|
|And as we talk through this, we’re going to talk about the difference between a durable power of attorney and a healthcare power of attorney. They are two separate documents. In 2023, we’re going to spend a few episodes on estate planning, different elements of estate planning. This idea of a durable power of attorney is an estate planning document. We believe it is something that is essential. It is absolutely needed, and as we set this up, I just want to give a couple of different scenarios here. Number one, if you have an IRA in particular, or a 401(K), that is owned by an individual. So you have a joint account and you think, “Oh, well, if something happens to me, my spouse can help me,” or, “I’ve got a joint account with one of my children, they can help me.” An IRA in particular cannot be held jointly, so the only way that somebody else can help or be able to direct this IRA or 401(k) has to be done through a durable power of attorney, and a lot of people that’s where they have the vast majority of their savings.|
|So as we talk through these things, they are interrelated, but they are extremely important for us to think through and realize that something could happen in the blink of an eye, and if we’re not prepared, it can create a lot of havoc for those that are having to help take care. All right, so let’s talk about the first topic here, and we have 10 items we’re going to go through, like I told you, interrelated, but they have its own different little intricacies of it. The first one is, I become incapacitated or I become disabled where I can’t make transactions. I told this story a couple of times, but one of the scenarios that occurred is we had a client who had a massive stroke to the point that they could not move nor speak.|
|And so now here they are in this situation, they are alive and their mental capacity is there, but they can’t express anything. They could not even coordinate any kind of muscle movement to be able to communicate with someone to say that they actually have mental capacity other than some tests that said, there’s brain activity. That was really all that was known at the time. Now, in this case, the majority of the money was in 401(k), IRAs, those kind of accounts, and nothing could be done by the spouse that was there, that was not in this situation because there was no durable power of attorney. Now, think about it. Now, you’re trying to go get a durable power of attorney, but yet that person is incapacitated, they cannot communicate, and so there was a big time of limbo here, extremely stressful. It was just trying to figure out how to get through, we didn’t know how long.|
|It ended up being quite a few months before anything could be done. Finally, the person did recover at least enough where they could nod just a little bit, and we were able to get a power of attorney done based on that, but again, a very tricky situation. By the way, the person had no symptoms, no problems prior to it occurring. They went to sleep one night, they had a stroke, the next day that’s where they were. So the durable power of attorney would allow somebody else to be able to just make simple transactions, pay the bills, withdraw some money, change a distribution, be able to talk and find out where things are. Simple little things that you cannot do. So if somebody calls myself or Murs and it’s not the client, we cannot disclose anything. We cannot talk of anything. So if you have an IRA and your spouse calls about the IRA, we can’t talk about that IRA to the spouse unless we have that person on the phone giving us permission or we have a durable power of attorney in hand, so a very, very important situation there.|
|Murs Tariq:||And that’s a huge one. Let’s move on to number two, which maybe isn’t as grim. We’re talking about the scenario of incapacity or disability, but now we’re talking about convenience and really the idea here is convenience while traveling. And so if you retire and you’ve got bucket list items that you’ve been wanting to, I don’t know, backpack across Europe for a month or so, or travel for an extended period of time outside of the country.|
|Or we’ve heard the scenarios of people getting stuck in certain areas, especially during the pandemic time, so having a power of attorney in place before you make that travel makes things easier for, I mean, the what ifs that can happen during travel at any given time, and they can help run your finances back at home, whether it’s just as simple as paying the bills or having the ability to keep the business running or whatever it is while you’re off having fun and traveling and exploring and sightseeing, and you’re not worried about, “Oh, did I take care of this or did I take care of that? I’ve got a person back home that can actually act as myself while I’m still traveling the country.” So the power of attorney adds an element of convenience to your scenario when you need it, so I think that’s a positive and a great thing to have in place as well.|
|Radon Stancil:||All right, the next one here at number three is health related issues. Now, I want to be very clear here. There’s two separate types of powers of attorney that we would have. One is healthcare, the other’s a durable power of attorney. So healthcare is really all the things about, “Do I want to be on life support? Can I have a healthcare agent to help make medical decisions?” That is not what we’re talking about today. That could be its own separate conversation. What we’re talking about today though is the financial things related to health issues. I’m going to go back to my example.|
|Now, you’ve got a person who is incapacitated or cannot communicate, and now in order to get the help they need, they want to go into a facility, and financial decisions have to be made to get them into the facility that needs to take care of them and to give them maybe the rehab they need. Well, again, that’s a financial decision, and the person who is there trying to help needs the power of attorney to be able to help make some of those financial decisions when it comes related to those healthcare decisions. It could even be, “I’m bringing them home, but I’ve got to go out and hire people, and so I need to have access to the funds to hire people to come into the house.” So although not health decisions, the financial element of that needs to be a part of the durable power of attorney.|
|Murs Tariq:||All right, reason number four, to have a durable power of attorney is to have someone with the ability to manage your finances, and I know this may be a little bit of overlap in all the reasons that we’re talking about, but to have someone that can handle your financial affairs if you’re unable to is going to be huge. And whether it’s due to incapacity or disability, for someone to be able to go into your accounts and set up the income streams that are needed, or to be able to pay the bills that are not getting paid and keeping the lights on, or to be able to manage the whole process of maybe a move from a home to a facility or something like that, all of that, that’s going to be really powerful.|
|I had a nice conversation last week with a client of ours and her husband. They know they’re moving to a memory care facility very soon, and she said, “I know I’m going to have to really start handling all this stuff for him. What do you need from me as far as on file so that because the money’s IRA money,” just like Radon was saying, so she was saying, “What do we need on file so that I can have these conversations seamlessly with you about my husband?”|
|And so basically I told her exactly what we’ll need, and she was very understanding about it. She was like, “Yep, we have the power of attorney,” so she’s sending us a copy of it and then we’ll get it on file with the custodian as well, the place that is holding the investment, which is important. So that when the time comes and she needs to be able to sign, signing things on his behalf, it’s already to go and we’re not waiting for paperwork to process or anything like that. So I thought of a really powerful conversation that I had of someone who’s very prepared and ready for the scenarios that are coming her way.|
|Radon Stancil:||All right, number five, real estate transactions. Now, there’s a couple different layers to this one. Let’s imagine that you have a second home or you have rental homes or just your own primary home. If you become incapacitated or you have a problem, or some scenario that needs to be helped, within the durable power of attorney, you can give and grant someone the ability to make a transaction by real estate. That could be retitling it, that could be selling it, that could be doing a lot of different aspects of that, but all these are things that would be included in this document so that the person could go and help.|
|So for example, if we’ve got a lot of clients who have a second home that’s the vacation home, and they know that in a situation if needed, they say we could sell the second home and that’s going to give us another influx of cash that could help us with long-term care type needs. Now, imagine if I don’t have this set up, the person who I own this home with or whatever it might be, cannot make the transaction without me, so if I have the durable power of attorney, that person now can make that transaction something we’ve already discussed and planning on doing, but they can then carry it out, although I can’t be there to help make those decisions and take care of that transaction.|
|Murs Tariq:||All right, number six is making gifts and not talking about present wrap type of gift, which could go under this as well, but really I think in reality what this is, we could have a client that has a desire to help pay for their grandkid’s college education. And so over the years they’ve been contributing or gifting to a kid’s 529 college plan, and if they’ve become incapacitated or have issues to where they’re not mentally able to remember that they’ve been doing this, well, if you have someone in place to help you and that knows your wishes that, “Yeah, it was his goal to get this money into it so that we could fund college for our grandson or granddaughter,” I think that’s a big one. Or just regular gifting schedules that happen throughout the year that we see with clients, whether it’s giving to their kids while they’re living. That’s a common thing that we see.|
|Or if it’s to charitable organizations, a big thing that we talk about especially when you reach the age of required minimum distributions is qualified charitable distributions and having the ability to, if you are doing those types of contributions where it helps your tax situation, and having the durable power of attorney to make sure that those types of tax-free distributions continue to help the overall tax situation as well as taking care of that need to help take care of an organization or something like that. So gifting in general, you have the ability to carry out someone’s wishes that you know that they had.|
|Radon Stancil:||All right, number seven, dealing with tax matters. Even if I become incapacitated or have some issue, I’ve still got to have my taxes filed. I’ve still got to be able to make decisions, to have decisions made that could save us tax money, for example. And so I can in my durable power of attorney include that I want somebody to be able to do all those tax type transactions for me. Again, we don’t think about all these things until you think about the idea that, “I’m not able to do it,” and however long that might be, I need somebody to take care of all these matters and taxes is an important one.|
|Murs Tariq:||All right, number eight, protecting privacy. I think this could be something that’s utilized if you are someone that likes their privacy, and you’re not open about things or you come into a scenario where you need that help of a durable power of attorney, but you don’t want it to be broadcasted across all your social media and all those channels and stuff. A durable power of attorney could come in and help you protect your privacy. So a lot of times if someone that is asking questions about an account without a durable power of attorney, we would say, “Well, why are you asking these questions? It’s not your account.”|
|With a durable power of attorney, they have power to it, so really their response can be, “You don’t really have to ask me these questions. I have the power to be able to get balances, to be able to make transactions, and I don’t need to tell you about the person that I have power of attorney over. I can just do these transactions on their behalf.” So it enables the ability if someone wants to be private or maybe not share something that has come about in their scenario. It makes it possible for privacy to be maintained in a scenario of incapacity or disability.|
|Radon Stancil:||All right, number nine, avoiding guardianship proceedings. Now, I’m going to go back to my example of the person who had the stroke, and this was a real conversation that we ended up having to have with the attorneys. And the scenario was going back to what I told you, the person could not communicate for some number of months to be able to get the durable power of attorney signed, and so the discussion was around this idea that you can go through and get guardianship of this person. That is not easy. It is not cheap.|
|It takes a lot of money and time and effort because you’ve got to go through the proceeding to say, “This person no longer is able to make decisions on their own. They need someone else to be their guardian.” And so that is a process that you don’t need to go through if you have a durable power of attorney. But if you don’t have one, then you’ve got to go through this process and be able to prove that the person’s in this condition and then the court system will appoint a guardian over that person, over me if that were my situation, and we can avoid all of that heartache and problem if we just have a durable power of attorney in place.|
|Murs Tariq:||All right, the final one, number 10, is maybe the most powerful, which is, it provides peace of mind, and it happens to coincide with the name of our company, Peace of Mind Wealth Management. A durable power of attorney, the thing about these documents is you want them in place when you don’t need them. You want them already there so that when that emergency situation does happen, whenever there is that incapacity or disability or being out of town or whatever it is that puts someone in a position where they can’t carry out either their wishes or the ability to transact or just don’t have it up there mentally, the durable power of attorney is going to be there.|
|So getting that done as soon as you are able to, age doesn’t matter. We don’t know when that scenario is going to happen, that puts us in that incapacity or disability. We have no idea of knowing when that’s going to happen, so having it in place as soon as possible before something happens is what’s going to provide that peace of mind. Knowing that, “Well, if this does happen or if this happens on our vacation, we’ve got a backup plan, and it’s all ready to go.”|
|Radon Stancil:||All right. We hope that by the end of this discussion, you have determined that you need a durable power of attorney. By the way, this is not an expensive document. It’s not a difficult document. It’s just a document that needs to be done and it needs to be done correctly. So if you are listening to this and you have any questions about it whatsoever, feel free to go to our website, pomwealth.net. Go to the top right-hand corner, click on the schedule, call Murs and myself, either one. We would love to be able to hop on a phone call with you and walk you through exactly how to do this, give you the resources that you need to do it. We are not attorneys, so we could not do it, but we can direct you in the right way so that you can get this accomplished.|
|If you do not have one, it’s not up-to-date, make it a priority that you need to get your durable power of attorney put in place. We hope this has been helpful. We look forward to being able to talk to you again next Monday. Have a great week. We hope this video has given you some confidence and clarity as you plan for a worry-free life in retirement. But what else do you need? We have created a complimentary video course called Three Keys to Secure Your Retirement. This video walks you through step by step what you need to do to get ready for retirement. You can also check out our podcast called Secure Your Retirement. You can subscribe below.|