Can someone explain what a financial power of attorney document accomplishes that a durable power of attorney document does not? In reading thru my durable POA it appears to give my attorney in fact all possible powers to conduct all of my affairs, including all financial transactions. What am I missing?
Suzie seems to be enamored of trusts, where as in Tx for example estate admin is about as easy. Get qualified, and file and inventory and you are done. Of course that does put some stuff on public record but thats about it. Other states may be different, but one should get advice on this from a lawyer/CPA or if possible someone who is both. Yes you do pay a lawyer fee on the estate as well. The executors fee should likley be about the same as the successor trustee fee, either zero if a beneficiary or some if a trust company.
Yeah, I've paid some tuition at that school.
A POA can be revoked by the guy who gave it to you. It's just permission to act for them and they can change their mind whenever they want. When they're no longer competent to tell you what they want you to do, then technically the POA has been revoked. Realistically most financial institutions won't question a POA unless they know that the guy who's granted it has been declared incompetent-- or unless the POA is too old (usually more than a year).
A durable POA is supposed to continue when a regular POA won't. The problem may occur when the bank says "Oh, yeah, that's a durable POA, but it's not on
our form. Have a nice day!" But that's what happened to my Dad in the 1980s with
his Dad's dementia, and that's about as much as I know regarding durable POAs. Maybe they work better these days.
A revocable living trust is run by trustees. If the person who's the trustee can't do their job then the successor (or a co-trustee) steps in. The problem is that these cost a few thousand bucks to set up and it's a bit of a maintenance pain to keep titling assets (accounts, vehicles, real estate) in the name of the trust. The advantage is that if the trustee is no longer competent, the successor just steps up without any other issues. You don't need to do any new paperwork or notaries or special forms for the bank. It's all been done and you have the authority to take control.
When my father began showing dementia symptoms, he didn't want to do any of that stuff because he didn't want to lose his independence or spend a lot of money. Today, knowing what I know now, I would've asked him to execute a POA (and have it notarized) and file it away in his lockbox until he wanted me to use it. When Dad's in the ICU and the surgeon comments on his Alzheimer's symptoms, it's a little tough to find a notary.
So we had to go the conservator/guardian route. It took our lawyer nine months to get there. (Admittedly lawyers don't put a priority on this, and in many states you don't need a lawyer.) Part of the process involved a special psychologist's assessment to prove that my Dad was no longer competent: $3670 at $275/hour.
The other $11K was just legal bills at roughly $250/hour (some of it done by paralegals for "less"). We don't have them all-- that's just what we've paid so far. I'm pretty sure the rest of the December invoice will only be about $2K.
Suddenly that revocable living trust doesn't seem like such an expensive hassle.
I suspect that most families start with joint accounts (for example, husband & wife). Later they hand the logins & passwords to a trusted adult child, and might even make that progeny a joint account owner. Perhaps they go the POA route, and hopefully the banks & brokerages don't ask any more questions after they set up their online account access.
Conservator ain't no magic wand. The bank where my Dad's pension & SS checks are deposited didn't simply take the court order and obey my commands. I had to apply with two forms of photo ID and fill out a signature card, just as if I wanted to open my own account. Then they set me up with an online account, and I had to register it. Then I waited another week for them to snail-mail me the login & password.
I asked them to put the money in CDs. Unfortunately they don't do that online like PenFed, so now I have an application and a new signature card to fill out for each CD. In the process the bank discovered that Dad opened his account before 9/11's legislative tightening of financial controls. The "personal banker" had the chutzpah to tell me (despite all the legal paperwork) that before they can open Dad's CDs they need a copy of his driver's license or his Medicare card. In their words "We just need to re-verify his identity because he opened his account before we started doing that."
Now I'm waiting to hear back from PenFed & USAA, who have higher CD rates anyway. Dad's checking account is about to become just a sweep account for his pension/SS before the money goes to PenFed or USAA.
FWIW Dad gave me his logins & passwords for Fidelity & Vanguard. I was able to fill out Fidelity's "transfer of assets" form to consolidate his assets there. They did the paperwork with Vanguard and Vanguard obligingly turned it all over to Fidelity. That part was pretty straightforward.
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