A Power of Attorney (POA) is an
essential tool for your estate plans, and a mighty strong one at that. In
effect, every adult should have one. Like most legal tools, the POA can be
tailored to fit nearly every need.
The broadest POA is the “General
Durable POA.” This gives the agent you appoint authority to do nearly every
legal and financial act you can do for yourself, even when you are
incapacitated. That is broad authority. In the wrong hands, it can be more than
dangerous. Think of it as “legal dynamite.” In the right hands, it can be a
blessing to you – and your loved ones.
On the other hand, it is
possible to grant limited or specific POA authority. For example, you can limit
the duration the POA is effective and even the specific acts you authorize.
This can provide a degree of safety when you don’t want to grant open-ended
Practically speaking, senior
loved ones oftentimes have IRA accounts that need ongoing management and from
which minimum required distributions must be taken. If these loved ones become
infirm or develop cognitive issues, then their IRA accounts will need to be
managed and administered for them. The
Slott Report explored this legal and financial fact of life in a recent
article titled “Using a Power of Attorney for an IRA.”
One if the key take-a-ways from the article is that not all IRA custodians will
treat various POAs the same.
In addition to appointing the
right agent for your POA and selecting the right type of POA, be sure to
confirm that your POA will be accepted by the third parties that will be asked
to honor it. In this case, an ounce of prevention is worth more than a pound of
Reference: The Slott Report
(March 26, 2013) “Using a Power of Attorney for an IRA”