The similarities between knives and powers of attorney

August 11, 2016 - Posted by: admin - In category:

taxes - No Responses

Are knifes dangerous or useful instruments? That depends on how they used and for what purpose (and by whom).

Most of us would not see a typical kitchen knife and immediately have feelings of panic and fear.  We understand that kitchen work often requires the use of knives.  And it is difficult in most instances to prepare meals without using knives.  So in general, we believe that knives are useful instruments.  On the other hand, if there is a group of 2 and 3-year-old children wandering around in a kitchen area, you and I would be very nervous if the same kitchen were knives laying around within reach of these toddlers.  Such a stark contrast in our view of the safety, appropriateness and degree of “danger” present with regard to the very same kitchen knives.

That is a simple analogy.  At first glance, you may be wondering what in the world this has to do with anything related to estate planning.  However, this basic analogy does have application in a discussion relating to a Power of Attorney.  Just as with a knife, a Power of Attorney can be a very useful  instrument or it can be a potentially dangerous tool used for much harm.  Let’s discuss below how and why this is the case.

Is there really any danger to be associated with a Power of Attorney?  Again, that very much depends on who is asking and the circumstances relating to a Power of Attorney.  I have almost never done an estate plan without using a Power of Attorney as part of the estate plan.  Further, I have at times used a Power of Attorney for a very specific purpose, even without doing a complete estate plan.  One example of this strategic and separate use of a Power of Attorney is when an LDS missionary gives his or her parents legal authority to act in his or her name while the missionary is away for 18 months or 2 years.  In that example, through the Power of Attorney, the parents are given the right to use bank accounts, file taxes, collect payments, run businesses and many other such items.  So we use Powers of Attorney very regularly and for good purposes.  Even so, we are always careful about how these are designed and used.

Let’s step back here for a moment and remind ourselves of a few basic points related to a Power of Attorney.  A Power of Attorney is a legal document which permits one person to give legal authority to another person or group of persons to act in the name of the first person.  In essence, a Power of Attorney permits “Person A” to give “Person B” the ability to act as “Person A” with regard to use and control of assets of all types. Understanding this, you know can begin to see why these legal instruments are at the same time very useful and often needed, and yet also have the potential for abuse and problems.  Most of the horror stories you have read or heard about a family member or “friend” emptying the bank account of an elderly person are incidents which involve misuse and abuse of a Power of Attorney.

With that potential for abuse and problems, why would we ever use these items?  Just as with the kitchen knives, when used for their intended purposes, by the right people and in the correct circumstances, Powers of Attorney can be quite safe.  A general rule is that it rarely is a good idea to give an “active” Power of Attorney to a non-spouse, absent unique circumstances.  Rather, for non-spouses, it is usually best to give a “springing” Power of Attorney, which does not become active until the giver has become incapacitated and sometimes one or more other conditions precedent.

In summary, please remember that the utility and safety of a Power of Attorney, like a knife, depends in large measure on the circumstances.  When used properly and by the right people, these are very good, safe and proper legal instruments.

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