You might be wondering what a POA is and why you need one. Or you could be like many others who know what a POA is but do not have one in place.
Equally, you could be in the tiny minority of the population who know what a POA is and have one in place, in which case I applaud you.
A POA is a Power of Attorney. In the event that you are unable to sign or make decisions or give instructions, it allows someone else you trust to make decisions for you.
When would such an event arise? Well, in the event that you are overseas, financial matters need to be solved. Or if you are incapacitated (disability) or if the grey cells in your head have decided to go on a part-time holiday (coma or short-term brain loss) or worse they have decided to retire and never work again (dementia).
We all hate talking about the worst that can happen to us in life. And for some reason, which completely escapes me, we are somehow under the impression that if we do talk about it and deal with it, then somehow it will actually happen or happen faster.
That, quite frankly, is crap. And you know it is. And yet, most of the population will do nothing. And that drives professionals who advise on his stuff, like me, to go nuts.
And do not assume that because you are healthy or because you are young you do not need one because you do.
In fact, my son turned 18 this October. I am sure he has an imagination of many wild things that will happen on that day and has an expectation of many gifts along the lines that baby Jesus received from wise men on the day he was born. By the way, I have never understood why a baby would be interested in or need gold, frankincense, or myrrh. Anyway, I am sure he will expect something of value from me too. But you must remember I am an accountant. Accountants don’t do wild things. And we are mean with our money. So, instead, he will get a POA to sign, and I will sleep in peace knowing that another mad testosterone-fueled adult has been unleashed on the world.
But I am digressing.
Anyway, let me give you a few examples of why a POA is something everyone needs.
- Several years ago, I had a client whose daughter aged 19, was involved in a car accident. She was in a coma, so she was unable to make medical decisions. The doctors asked the parents if they had a POA (they did not). And because they did not, doctors can totally ignore the wishes of parents and undertake any treatment they think is necessary even if they know the patient (the daughter) would not wish it.
- When I had my heart attack, I was conscious, so was able to make decisions, but once in surgery, I was probably not in a position to make decisions if there was a problem. But because my POA says my wife can make decisions, then her wishes would have been followed by doctors. Without a POA, the doctors could have done whatever they liked. Doctors take an oath to preserve life. This may mean keeping people alive in a vegetative state when the patient may not want to live that way. And my wife knows that the last thing I would want is to remain alive in a vegetative state not being able to control the drool dripping from my mouth.
With a POA she can stop them. Without one she must go to court to convince a judge to override medical treatment that doctors advise.
But it is not just medical matters. Talking to banks, lawyers, and accountants become easier with a POA. But without one, the process becomes a complete nightmare because all the above plus more will simply refuse to talk, meet or take action leaving sometimes critical matters in limbo.
An ordinary power of attorney allows someone else to manage your financial affairs for a temporary period, for example, if you are living abroad. An enduring power of attorney ensures that your wishes are upheld even if you lose mental capacity due to an accident or illness.
It is important you choose the right people, too. My wife has no understanding of money and finances. Her idea of a money issue is if the debit card we use were not to work.
She has no idea of what accounts we have or for what purpose. It would be bonkers of me to add her as my sole attorney for money matters. But together with someone else who does have an understanding makes sense.
Powers of attorney are legal documents, and with anything legal, the rules and procedures are equally bonkers. This also means that inevitably, you will have to sit in front of a humourless legal representative in a suit whose command of English is gobbledygook at best. They may as well be speaking French, Russian, or Japanese. Plus, documentation will need to be written and signed in a set order, and then you need to be placed in a safe place that is easily accessible should it be needed.
Our advice is never to do this DIY. You would never sell a home without the advice of an expert. The same is true for this.
Once signed it makes sense to have them stored with, say, your Wills. Make sure you have certified copies which you keep and tell your attorneys about it too. The last thing you need is to have your one copy of a POA at your solicitor’s office only to find out you need it at 2am on Saturday night when the only thing you can get hold of is a recorded message.
If you don’t fancy deciphering gobbledygook or sitting in front of humourless legal people, there are a few advisors that will facilitate a POA. At the WOW! Advisors Group we help clients navigate wills and POA. Wills and POA are part of estate planning. They form step 9 of 9 steps to work less, earn more and creating wealth. If you would like more information on this, email Hitesh at hitesh@wowadvisors.com.au or Ros at ros@wowadvisor.com.au. Or call us on 07 3161 9548.
