When people ask me what they can do to make things easier for their loved ones if something happens to them, the first question I ask is if they have power of attorney documents in place. A good financial power of attorney (“POA”) is one of the most important estate planning documents you can have. It allows you to appoint someone to act for you (your “agent” or “attorney-in-fact”) if you become incapacitated and are not able to make your own decisions. This document is important because Wisconsin does not have a default law that automatically appoints someone to “do your business” for you if you become incapacitated, unlike the default intestacy statute that dictates where your assets go if you pass away without an estate plan. Without a good POA, your loved ones will not be able to make decisions for you or manage your finances without asking the court to appoint a guardian for you. Guardianship is an expensive, time-consuming, and potentially divisive process.
There are many do-it-yourself POA forms available online; however, it is a good idea to have an attorney draft a customized POA for you. There are many issues to consider when creating your POA, and one size does not fit all.
The Agent’s Powers
The POA lists the agent’s powers. Powers given to an agent usually include the authority to act as you would. Typical powers include buying or selling property, managing a business, paying debts, investing money, engaging in legal proceedings, borrowing money, cashing checks, and collecting debts. Some powers will not be granted unless they are specifically mentioned in the POA. This includes the power to make gifts, create certain trusts, and designate beneficiaries of your insurance policies.
The power to make gifts of your money and property is a particularly important power which may or may not be included in a standard online POA form. If you want to ensure your agent has the authority to engage in Medicaid planning (i.e. Medical Assistance planning) on your behalf in the event you need to enter a nursing home, then the POA must give your agent the power to create or modify trusts and make gifts. The specific wording in a POA can have significant impact on your agent’s ability to act on your behalf, so it is necessary to consult an attorney.
Co-Agents
Although it is possible to name more than one person as your agent (i.e. co-agents), this can lead to confusion. If you name co-agents, you need to be clear whether your co-agents need to act together or whether they can each act independently. In Wisconsin, the default is to allow each co-agent to exercise its authority independently, unless the POA expressly states otherwise. It is often preferable to name a single agent, and then name alternate or back-up agents to act in case the named agent is unable to act.
Executing the Power of Attorney
A POA must be executed properly to be valid. Wisconsin statutes require you to acknowledge your signature in front of a notary public for your signature to be presumed to be genuine. In Wisconsin, additional witnesses are not needed for a valid POA.
A Few Final Thoughts
In conclusion, it is incredibly important that anyone age eighteen or older have a POA document in place. The companion document to the POA is the health care power of attorney, which is just as vital and allows your agent to make health care decisions for you. As a Wisconsin resident, without BOTH of these documents in place, if you are incapacitated and cannot make your own decisions, your loved ones may need to seek a guardianship. Taking proactive steps will help your loved ones to know your wishes and streamline the decision making process should unfortunate circumstances arise.
