Power of attorney: What provisions might you include or avoid

Every adult should consider signing a durable power of attorney authorizing an agent to take legal, tax and financial actions on their behalf. This is especially important if you become incapacitated or disabled. What provisions might you include in your power of attorney and what are some of the provisions you should be cautious about? Should your agent be permitted to make gifts? This can be advantageous for tax purposes, but under current law with such large estate tax exemptions (not in all states) this may provide no tax benefit. Permitting an agent to make gifts, especially without limit, could deplete your assets excessively. On the other hand, if you support family or others you may want to permit your agent to perpetuate those gives. What about changing beneficiary designations? This may be helpful to keep your beneficiary designations up to date, permit updating your dispositive plan if economic conditions or tax rules change. However, for some people that power could empower an agent to change a majority of your estate plan by changing beneficiaries on your life insurance, IRA and other retirement accounts. Powers of attorney are too often treated as “standard” forms but they should not be treated cavalierly. The provisions you include could be powerful in a positive or negative way.