A visit to our office will always include the
question, “Do you have your will, living will, and durable power of attorney in
place?” Some of our clients
affectionately refer to this list of questions as the “nag list.” Our intention is not to nag our clients, but
rather, to emphasize the importance of having your will, living will, and durable
power of attorney in good order. Even
the most comprehensive financial plan can crumble without the appropriate legal
documents in place.
According to a new survey by FindLaw.com, most Americans do not have the essential legal documents needed for proper estate planning, such as wills and living wills. The survey specifically states that the majority of Americans -- 55 percent -- don't have a will to specify the handling of their estate after they die. Even fewer have a durable power of attorney in place.
Many people understand the importance of having a will
and living will (also known as a healthcare directive). However, many overlook the necessity of
having a durable power of attorney in place.
A durable power of attorney is an exclusive type of power of attorney. A
durable power of attorney is distinctive from a regular power
of attorney and allows the agent to act on the principal’s behalf beyond the
incapacity of the principal.
What does this mean for you?
No one other than you,
the principal as described above, can withdraw or make changes to your personal
retirement accounts unless you have
named an authorized person, the agent as described above, in an established
durable power of attorney.
Let’s use the example of a husband and wife, Joe and
Mary, who are retired and living comfortably on retirement income. Joe suffers a stroke and is in a coma, and
now requires additional retirement assets for his care. Mary calls their financial planner to request
a withdrawal and finds that she is unable to authorize a withdrawal from their
retirement accounts.
Why would this happen?
Joe never established a durable power of attorney. While Joe was employed by a major
corporation, Mary stayed home to care for the children. When Joe retired, he rolled over his
retirement dollars to an Individual Retirement Annuity (IRA) and began an
income stream. Due to the nature of IRA assets,
only the individual whose name the assets are in can request a withdrawal. Since the retirement assets are in Joe’s
name, Mary cannot withdraw from the account.
If Joe had written a durable power of attorney authorizing his wife as
his agent, Mary would have been able to request the withdrawal.
If you do become incapacitated without having assigned
power of attorney, the court will step in to appoint a guardian. This process
might cost your family well over $1,000, not including the cost of the
guardian's annual visits to court to report on your situation. Plus, the person
chosen may not be someone you would have picked. This is why having
a durable power of attorney is so crucial.
Most attorneys offer a comprehensive estate planning
package that includes a basic will, living will, and durable power of attorney
for one price. To avoid an unwanted
situation, take the time today to discuss these documents with an
attorney.
If we at Kemp
Harvest Financial Group can help you in any way with regard
to your financial planning needs, please feel free to contact us.
Securities and investment advisory
services offered through National Planning Corporation (NPC), NPC of America in
FL & NY, Member FINRA/SIPC, and a Registered Investment Adviser. Registered Representatives of NPC may
transact securities business in a particular state only if first registered,
excluded or exempted from Broker-Dealer, agent or Investment Adviser
Representative requirements. In
addition, follow-up conversations or meetings with individuals in a particular
state that involve either the effecting or attempting to effect transaction in
securities, or the rendering of personalized investment advice for
compensation, will not be made absent compliance with state Broker-Dealer,
agent or Investment Adviser Representative registration requirements, or an
applicable exemption or exclusion. Kemp
Harvest Financial Group and NPC are separate and unrelated companies. NPC PRIVACY POLICY. NPC #95184 04/17
Some estate planning and tax services
may be offered by a qualified third party. NPC does not provide tax or legal
advice.
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Jennifer Bauder is
a Registered Paraplanner™ with Kemp Harvest Financial Group and has over
seventeen years of experience in the life insurance and retirement benefits
industry. She is a graduate of Bloomsburg University and holds a Registered
Paraplanner™ designation, FINRA Series 6 and 63 licenses, a Pennsylvania Notary
license, the Associate Customer Service designation, and the Associate,
Insurance Agency Administration Professional designation.
