Power-of-Attorney Documents May Be Even More Important Than a Will
Q: My daughter, age 53, asked me to think about creating a durable power of attorney in case I should become so incapacitated that I could not manage our affairs. I am 85 and in generally good shape, although I have hypertension and a degenerated kidney. My wife, 77, has Parkinson’s disease, arthritis and memory loss, although she is able to manage her basic needs. Should I consider giving my daughter a power of attorney even though I’m in good shape?
A: Yes. Yes, yes, yes, yes, yes.
Think of this not just as sound financial planning, but as a huge and loving gift to your daughter.
A durable power of attorney for your financial affairs (and another one for health care) will give your daughter the power to take care of your bills and make decisions for you if necessary. You can have the documents written so that they would not become effective until you become incapacitated (and exactly how that is defined should be included in the document language). But these documents would save you and your daughter from the cost and trauma of having to go to court to give her the power to take care of you.
Anyone who has had an incapacitated parent--and no power of attorney--can tell you what a nightmare it can be struggling to pay bills, deal with doctors and handle insurance claims without it.
Actually, everybody should have these two documents; they’re probably even more important than a will, because they can affect your quality of life and that of the people who care about you. Wills, by contrast, mainly affect what happens to your stuff and your money after you die.
Your situation is especially critical because your wife would not be able to step in if something happened to you. In fact, your daughter would face the added burdens of caring for her; while you say your wife can handle her basic needs, you probably underestimate the amount of cooking, cleaning and other care you provide for her. Imagine your daughter doing all that, plus hassling with hospitals, insurance companies and banks on your behalf.
Any estate-planning attorney can create durable powers of attorney for you, or, if money is tight, you can use Nolo.com’s WillMaker software, which costs about $70.
Please, don’t put it off. It’s one more way you can leave a loving legacy for your child.
A Good Primer for Any Size Estate
Q: You recommended a book by attorney Denis Clifford called “Plan Your Estate,” but when I went to look up the book on Amazon.com, it was described as being directed toward estates worth less than $1.2 million. As you know, if one owns a home in California, that sum is almost immediately reached, in spite of what one’s other assets may be. Can you please recommend another reference, or is the Clifford book still relevant?
A: You and I obviously live in very different neighborhoods.
Clifford’s book is a good primer on estate planning for any size estate; he clearly maps out the basic principles you need to know. If your estate is large enough to be subject to estate taxes, however, he (and every other sane person who knows about estate planning) recommends you get professional help. Get the book, read it for the basics and then find a specialist. The California Bar Assn. certifies lawyers in estate planning; you can get referrals by calling your local chapter or visiting https://www.calbar.org.
Get a Second Opinion on Annuities
Q: Thank you for writing about annuity scams. This is an area of the financial services industry about which the general public needs some education. As a financial planner, I see many cases in which clients have been sold expensive variable annuities totally unsuited to their needs.
A: Annuities are complicated insurance contracts that have significant drawbacks that often aren’t adequately explained to the buyer. That’s why I recommended that buyers, particularly older people, get an objective second opinion before committing their cash. For more information on insurance and annuities, visit https://www.latimes.com/insure101.
Insurance Agent Takes Umbrage
Q: How dare you refer to insurance agents as unscrupulous peddlers! I have sold fixed annuities for years and my clients are very happy with them.
A: I didn’t refer to all agents as unscrupulous insurance peddlers, just the ones who sold unsuitable investments to the elderly. If the shoe doesn’t fit, don’t wear it.
Most principled financial planners and insurance professionals are concerned about the rising tide of inappropriate annuity sales. Some agents are letting their desire for hefty commissions outweigh their obligation to make sure their clients are getting an investment that suits their needs. The results can have serious repercussions for the clients’ financial well-being.
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Liz Pulliam Weston is a personal finance writer for The Times and a graduate of the personal financial planning certificate program at UC Irvine. Questions can be sent to her at liz.pulliam@latimes.com or mailed to her in care of Money Talk, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053. She regrets that she cannot respond personally to queries. For past Money Talk questions and answers, visit The Times’ Web site at https://www.latimes.com/moneytalk.
