In this solo episode of the Good Steward Law and Wealth Podcast, host Ledly Jennings explains why every adult needs a financial power of attorney (POA) and how to structure it effectively. He distinguishes between healthcare and financial POAs, then focuses on financial POAs, describing the differences between a basic POA, a durable POA (which remains effective during incapacity), and a spring‑acting POA that only activates upon a physician’s certification of incapacity. Jennings critiques the common one‑page statutory POA forms, advocating for a comprehensive 18‑20‑page attorney‑drafted document that enumerates specific powers such as real‑estate transactions, gifting, trust creation, and beneficiary changes. He illustrates practical applications, especially for elder‑law scenarios like Medicaid planning, where a POA enables the creation of a trust to transfer assets out of the client’s name and avoid costly guardianship proceedings. The episode also highlights common pitfalls: banks refusing stale POAs, state filing requirements (e.g., Arkansas real‑estate filings), and the risk of public filing. Jennings recommends updating POAs at least every five years, naming multiple agents in succession, and ensuring separate documents for financial and healthcare decisions. He adds a brief note on the importance of having a POA for children once they turn 18, especially for accessing educational records. The episode concludes with a call to action to contact Good Steward Law for personalized POA preparation.
Welcome to the Good Steward Law and Wealth Podcast, where host Ledly Jennings explores law and finance to help listeners become better stewards of their wealth. Each episode covers the latest trends and strategies in estate planning, elder law, investment, and wealth management. Tune in for the knowledge and tools for financial success and security.
Welcome back to the Good Steward Law and Wealth Podcast, um, and excited again about today's episode. This episode, we will have— keep this one pretty short and informative— on a tool that everyone over the age of 18 needs regardless of your financial situation. That tool is a power of attorney. So you have probably heard of a power of attorney. Maybe you know what it is, maybe you don't, but generally a power of attorney is a document that gives someone else the power to make decisions for you. But there's several kinds of power of attorney. In fact, there's two main distinctions. One is a healthcare power of attorney and the other is a financial power of attorney. Today what we're going to talk about is a financial power of attorney. So this is someone that you name, or it's a document that you name someone that can make financial decisions for you. And multiple kinds of that type of power of attorney as well. You probably hear about a couple of main ones. The first kind of just a basic power of attorney is while you're living, I can have this and it could give someone the ability to sign for me and make decisions for me if I'm alive, but I'm not, you know, in the room or I'm out of country. Maybe I want my wife to be able to do something on my behalf when I'm not there. That would be an instance, but that type of power of attorney ends if I'm incapacitated. So the most common one you hear is called a durable power of attorney, meaning it lasts through your incapacity up until death. So that instance would come in, say I am in a car wreck, in a coma, incapacitated. My wife could then sign for me if she's my power of attorney and make financial decisions on my behalf. So anytime you hear power of attorney, if you're wanting one for that reason, you need to make sure it is a durable power of attorney, not just a normal everyday power of attorney. Sometimes the durable power of attorneys can be what's known as springing, meaning you don't want to give your kids, say, the power to sign for you today while you're fine, but it springs into action when you need it to. So that could be when a doctor signs a form saying yes, they are incapacitated, or yes, they have Alzheimer's and can't make decisions for themselves. Let's kick that power of attorney into action. So that is a springing power of attorney. Now, I have a lot of clients that come into my office with a 2 or 3-page one document that is— they say, this is my power of attorney, and it may have been drafted by a general practitioner or just several, you know, 10 years ago or so. Um, and that is because a lot of old attorneys back in the day, and someone that doesn't specialize in what I do, they combined your healthcare and your financial power of attorney. We do not do that. The best way is to have two separate documents for your power of attorney. So if you have one document and think you're covered, you need to double-check it and make sure that you have two separate documents, one for financial and one for healthcare. Um, why do you separate that? Well, there are two different purposes. So your financial reason you'd need a power of attorney is completely different than when you need a healthcare reason., and you may name different people for those roles. Maybe my son is really good with money, I want him to be my financial power of attorney, but your daughter is a nurse or a doctor and really good with medical decisions, so you want to name them for medical reasons. The other reason is you don't want your doctor to know all your financial information, just like you don't want your banker to know your health information. So they need to be two separate documents. And really, if they were combined, it would just be a really thick document that's hard for your everyday doctor or banker to understand without a lawyer to interpret it. So needs to be separate documents. The next thing we do— so there is a state power of attorney, and they call it a statutory power of attorney. Every state has one, and it, it is just a one-page form document that lists all the powers that you can do within a power of attorney. And it's just a checklist of about 10 or 15 two-word powers. Like it may say real estate transactions. And if you want your power of attorney to make real estate transactions, you check this box. Now that is just a one page that works for the state. My power of attorneys are about 18 to 20 pages. And the reason for that is they go into a lot of depth. There's not just one sentence that says real estate transactions. In my power of attorney, it says real estate transactions and a paragraph about what they can and can't do. So they can buy real estate on my behalf, they can sell my house, or they can do this, or they can't do this. They can't sell my house, or they can't transfer my house to themselves, something like that. You know, we specifically list the powers. So why do you need that is one, there are a lot of banks, or bigger financial institutions that look at a power of attorney and they say, well, you can't trade this type of account with a power of attorney. So in our power of attorneys, we want to be able to point to a specific article that says, yes, we can do that. Some things that are commonly left out of a state power of attorney that are in ours is powers to make gifts or transfers, powers to create an estate plan, powers to create a trust, powers to amend a trust, powers to change a beneficiary. Those are not listed in most state statutory forms. Why would you need those listed? This is a huge issue. So let's think, a common occurrence in my practice is someone comes into our office and it's a son, has an 89-year-old mom, and he says, Mom is going to the nursing home today. She, she, she can't manage herself anymore. She has Alzheimer's. She needs to go to the nursing home. Well, the cost of that nursing home in Arkansas runs about $8,500 a month. So it is very expensive. And no matter how much money you save, that's going to whittle it down pretty quick. So a lot of people want to get qualified for Medicaid to where they foot the bill. To do that, you have to basically not have any assets in your name. So if they're coming to me and he says, Mom has, you know, a house and farm and different things in her name, how do we get it out of her name? Well, if she can't sign for herself, the only way to do that is with a power of attorney. So if you have a power of attorney, we can then create a trust and transfer that family farm from her name to the trust, get it out of her name, and potentially get her qualified for Medicaid. Now, there's a lot of rules around that that we will go into in a separate podcast, but generally that's how it works. If you did not have that power of attorney, you'd have to go to the court, get a guardianship in place, which we're doing a couple right now. They take, you know, a month or two sometimes depending on the family to even get the guardianship. But then once you do that, you have to request from the judge to make these transfers. And to do that, we've done that before and have been successful, but in that request, you got to draft— I had to draft a very long 2 or 3 page memo explaining why we need to do this. And obviously that can be expensive when an attorney's drafting something that long and having to file it with the court and go to court to argue for it. So you want to avoid that, and you can with just a simple power of attorney. So we, like I said, we could then use that power of attorney to create a trust for the mom and move assets out of her name. So it's very valuable in, in that aspect of things, especially when you want to save $8,500 a month. It can be one of the most useful tools. A lot of elder law attorneys say the power of attorney is more valuable than than a will or a trust. And I could make that argument. Now, some other details that we want to talk about. So some common pitfalls I see is you may go to your bank with a power of attorney and the bank says, well, we can't accept that, it needs to be filed with the clerk. That can be true in some states. Some states you have to publicly file your power of attorney to make it valid. Not in Arkansas, you do not have to do that in our state. You can, you just, we tell the bank, hey, our statute adopted this code, we do not have to file this publicly. I do not like filing those publicly. One, because it makes everything public in the court system. They can see who you named as power of attorney and what powers they have. Not a good thing. And also my documents, about like I said, about 18 pages, so filing that with the clerk can be pretty expensive. It costs like a, they charge you per page, so it's like $140 or something just to file it. Now in Arkansas, you do have to file a power of attorney if you're making a real estate transaction. You file that with the deed when you record it. So that is one instance where you have to file the power of attorney. And another common thing that we do with our clients is keep the power of attorneys up to date. So banks, or I had this come into play with, I think it's Bank of America, they did not want to accept a power of attorney because the client signed it 10 years ago or so and never did anything with it. They just signed it and now they're submitting it to use it to access bank accounts. And they, they will— the bank will say sometimes their internal policy says that one's stale, we need a new one. So you want to keep your power of attorneys. The rule I've been using is at least every 5 years you want to update them. And part of our program for clients that do estate plans with us If they opt into our program, we update them every 5 years. No matter what happens, we just keep them up to date so they have one. So that's common. The other thing is you want to name multiple people to be your power of attorney, usually in succession. So say husband and wife, typically they are each other's power of attorneys. You know, you want your wife to be able to do things for you and vice versa. But husband and wife travel a lot together. So what happens if they're in the same accident? What do we do then? Well, you want to name someone secondarily, maybe a son or a friend, a brother, a sister that can step in when you and your wife both can't act. And usually it is a family member if you have a responsible family member, someone that's preferably younger than you, so ideally they'll be around when you're in the nursing home. But it also can be a bank or trust department. Some banks will act as power of attorney, some won't, but so you just check with your trust department at your local bank and see if they do that. Um, but that can be an option. So takeaways from this one is everyone over the age of 18 needs a power of attorney. Oh, let's hit on that real quick. As soon as your kid turns 18 and goes off to college, you lose power to sign for him. He's his own person. So I, I had this come up the other day, say, uh, dad was saying, well, I'm paying for the college, but they won't release his grades to me. It's because you're not power of attorney. So this is especially important for healthcare power of attorneys, which is a separate deal. But you want to make sure as soon as your kids turn 18 that you have them sign a power of attorney that lets you sign for them and make decisions on their behalf if something happens to them. So the takeaway is over 18, you need a power of attorney. It needs to be a thick and specific power of attorney that lists all the powers that you need or could want, and you need to name multiple agents. And generally, that's it. So thank you for listening to this episode of the Good Steward Law and Wealth Podcast, and we will see you next time.
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