Recently, I received an email from one of my client’s daughters. It was mom’s 90th birthday and she took mom to a casino. Mom won $1,300.00 on a slot machine. When the staff member came over to cash mom out and give mom her winnings, she asked for photo ID. Mom let her license expire years ago, as she was no longer driving so she did not have a photo ID. The daughter asked the casino staff member if she could sign for mom as power of attorney because she had photo ID, they said no.
Apparently, the rule is that the person who won the money (pushed the button on the slot machine) has to be the one to collect it so she could not use the power of attorney to collect mom’s winnings. Although the power of attorney is a very powerful document, it is not powerful enough to collect casino winnings.
Why do you need a power of attorney?
A durable power of attorney 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. Without a power of attorney, your loved ones would not be able to make decisions for you or manage your finances without asking the court to appoint a guardian, which is an expensive and time-consuming process.
The person you appoint to act of your behalf is a very serious decision. Most people trust a family member to handle the responsibility of making financial decisions for them.
How powerful is the power of attorney?
The powers given to an agent typically include:
- buying or selling property
- managing a business
- paying debts
- investing money
- engaging in legal proceedings
- borrowing money
- cashing checks
- collecting debts
Some powers are not included unless they are specifically mentioned such as making gifts, the ability to change beneficiaries on life insurance and retirement accounts, and dealing with retirement accounts to request required minimum distributions. The power to make gifts of your money and property is a particularly important power. If you want to ensure your agent has the authority to do Medicaid planning on your behalf in the event you need to enter a nursing home, then the power of attorney must give the agent the power to modify trusts and make gifts.
In the past, powers of attorney were one to three pages in length. The power of attorney form was revised in 2009 and the current power of attorney with a gift rider is approximately thirteen pages long. If you have a power of attorney that was executed before September of 2009 it should be reviewed by an attorney to confirm that your agent has the ability to make gifts and do Medicaid planning. It is also a good idea to review your estate planning documents every five years. If you have a power of attorney executed before September of 2009 or estate planning documents that have not been reviewed in five years you should resolve to review your documents in 2021. Please contact our office for a review.