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When Power Of Attorney Fails.

By John Dietz - Email Editor

Date : 11-Aug-2007

Dear Subcriber,

The estates of the elderly, their finances, medical situations and their property are often abused. A study by the Attorney General in the state of New York documented that only 1.8 cases per one hundred thousand elderly patients were reported in 2006. Of these, only one out of every one hundred thousand elderly people went under investigation.

The problem with Durable POA is that it relies on assumption; the assumption that the agent will honor your wishes. The longer a person remains incapacitated, the less likely that the remaining relatives will bring issues to the surface. Details about checks being written over years, management of finances and care of property all fade away with time. It is not a simple issue that our families love us.

A real life example exemplifies why Living Wills and Durable Power of Attorney does not protect your assets or protect the inheritance that you expect to bequeath to your heirs, as in the case of George Ferrara in 2006 as ruled upon by the New York State Appellate Court.

In 1999 a stock broker named George Ferrara willed his life's savings to the Salvation Army. In January 2000, the ailing George Ferrara signed a POA over to his nephew Dominic. George Ferrara signed a form that said that the agent could make “gift” payments to the nephew Dominic Ferrara. By the time George died, the account was empty and there was no money left for the Salvation Army. When brought before the court, the court ruled that the “agent” must act in the best interest of the principal. It is fantastic that the court ruled this way, but there was one big problem: The money was already gone. Herein, lays the dilemma.

If the agent does not act on behalf, the POA and the basis of the intention of the principal are just a smoke screen. In the case of George Ferrara's assets, they certainly were not protected in the manner of original intention. In reality, the assets of George Ferrara were not protected with the original intent of George Ferarra.

Wouldn't a Living Will have helped George Ferrara?

A Living Will is a legal document that specifies in advance any life-sustaining measures a person refuses to undergo if there is no reasonable expectation of recovery. Typically, a person may refuse the use of feeding tubes, respirators and cardiac resuscitation. The Living Will makes an incapacitated individual's treatment preferences known in a set of limited and specific circumstances and serves as a guide in medical decisions. This Will has power over the Medical or Durable POA and conveys the wishes of the principal.

A Living Will has power of the principal while they are alive and their Last Will and Testament enacts upon death. The problem is that only the Durable of Power of Attorney authorizes movement of property and finances, and this is at the digression of the agent.

If George Ferrara had his affairs set up differently, he could have prevented the movement of his assets so that his last wishes could have been honored.

When presented in this light, one conclusion is apparent. You should understand ALL of your options before signing anything away. Having said that, POA's are important and necessary. As you investigate your options, each state has their own technicalities when it comes to Durable POA's and/or health care proxies. Trustmakers is available to enlighten you with opportunities that will protect your assets and your bequest in a coordinated effort with your Estate Planning. We believe that you should know all of the options before making such an important choice in life.

It's coming down to the wire to come to our Las Vegas Seminar on October 1st and 2nd . Hope to see you there.

Stay well and be protected.

John

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ABOUT THIS EDITOR:

John Dietz is a strategic advisor at Trustmakers.com with a passion for client solutions that can encompass your business, your real estate, and your personal assets. Mr. Dietz serves to educate you on the latest in asset protection planning.

Full Bio - Email John