Multiple tools are often needed to plan for end-of-life care and distributing assets in an estate. One such tool is the power of attorney. It’s important for estate owners in Ohio to understand how powers of attorney work.
A power of attorney is used when a person becomes incapacitated and can no longer make decisions regarding finances. The designated agent makes financial decisions instead. Ultimately, this person can control any assets that the grantor is sole owner of. After the grantor passes, a power of attorney becomes invalid.
When using a trust, a financial power of attorney may not be needed. This is because assets in a trust are controlled by a trustee or trustees. With a revocable trust, a grantor can still make changes regarding the assets in the trust and the terms of the trust.
Two people could be listed to serve as agents for a power of attorney. This offers an extra level of protection against abuse. Additionally, a grantor could list alternate people in case an intended agent is incapacitated or passes away.
Understanding potential pitfalls with a power of attorney could help prevent abuses from occurring. While an agent has a fiduciary duty to use assets as directed and for a grantor’s benefit, an agent could take funds for personal use instead. An agent could also change beneficiary designations when a grantor is incapacitated and nearing death. This could be done so that a spouse or sibling can gain a larger portion of an inheritance.
For medical decisions, a person might use a living will or medical proxy to designate an agent to act on their behalf. This could be needed in addition to a financial power of attorney. When considering different estate planning tools and one’s needs, an attorney could offer valuable guidance.