Is Your Financial Advisor Asking for a Power of Attorney?

Is Your Financial Advisor Asking for a Power of Attorney?

Tom and Alice are a young couple who recently completed their estate planning documents with us. Alice reached out to our office, asking about a call they recently got from their financial advisor. The advisor was requesting that Tom and Alice each provide a Power of Attorney for his file. Alice wanted to know if the request was legitimate, and if they should comply.

Powers of Attorney – The Basics

The idea behind a Power of Attorney is pretty simple. When, for whatever reason, you are not able to make or express decisions on your own, the Power of Attorney grants someone else the power to do that for you. Two of the most popular types of decisions are medical and financial.  Powers of Attorney are commonly used when a person’s mental or physical health renders them incapacitated.

When an Emergency Strikes

Tom and Alice are both medical professionals. They occasionally travel to different parts of the world performing work as medical missionaries. The work is rewarding, but not without risk to their health or well-being. Their exposure to exotic diseases, the danger of travel to remote areas, and the possibility of political unrest are all cause for concern.

Alice presented one possible scenario. Tom gets badly hurt in a crash. He’s laying in a hospital bed in a coma. Alice needs access to cash for his treatment, which costs more than the money sitting in their “rainy day” bank account.

POA Comes to the Rescue

When trouble or tragedy strikes without warning, the last thing you want on your hands is a logistical nightmare. This emergency scenario is one of the reasons Tom’s financial advisor wants a Power of Attorney on file.

Alice and Tom have done the responsible thing in having their estate documents prepared. But those documents are safely locked away in their home. If Alice was at Tom’s bedside in southeast Asia, she would be unable to get the Power of Attorney to their advisor for quick action.

A Power of Attorney Protects the Financial Institution

A financial institution also wants to have Powers of Attorney on hand for their own protection. Sometimes an advisor follows a directive concerning the IRA of a spouse. it’s done with a wink and a nod, without a Power of Attorney on hand.

A man named Bill, for example, directs his advisor to make an investment in the IRA of his wife, Janice. The advisor does not have Powers of Attorney for the couple. The investment turns out to be a terrible mistake, and Janice loses a great deal of money. She calls the advisor, who is now in a lot of trouble, because Bill was not authorized to make decisions regarding Janice’s IRA.

Save Yourself the Potential Headache

Without question, couples and individuals should complete their estate planning documents, even if they are not in their retirement years. In the face of unexpected tragedy, those documents save spouses and other loved ones a great deal of time and trouble, usually at a time when more trouble is the last thing they want.

We could write an endless number of scenarios for our clients. You can probably think of one or two for yourself. In Alice’s case, she and Tom have a wonderful, strong relationship. They decided to comply with the request of their advisor. They were given the option of sending notarized digital copies of their existing Powers of Attorney or executing a set that the advisor would send.

Alice chose to execute the set their advisor mailed to them. They now perform their medical mission trips with more confidence that they are better prepared for possible emergencies.

Are You Prepared?

When was the last time your estate documents were reviewed in light of your current situation and goals? Call Quinn Estate & Elder Law if you have questions or need help. 636-394-7242.

2018-07-19T16:07:01+00:00