The H Group Blog

Investment and Financial Planning news from some of the best in the business.

Do You Have a Durable Power of Attorney for Your IRA?

Do You Have a Durable Power of Attorney for Your IRA?

Ron Kelemen - Wednesday, December 07, 2016

Our team appreciates simple solutions for complex issues. A favorite simple solution of ours is the Durable Power of Attorney. To quote the Oregon Bar Association, "A power of attorney gives someone else, called an agent, the right to make financial decisions about the things you specify in the document." 

There are four main varieties of powers of attorney – limited, general, durable, and springing, but the focus of this article is on the "durable" variety. The beauty of Durable Power of Attorney (DPOA) is that it remains in effect even if you become incapacitated and it can cover assets not in your trust, like IRAs. During a meeting we had with a married couple, we brought up the subject of their DPOAs. They responded with, "Isn't that why we have a trust?" They had a revocable trust and have done an excellent job of funding it. What they did not realize is that the trust cannot own their IRAs—a very significant part of their estate. "That's okay," they said, the IRAs have beneficiaries and we recently reviewed them with you." Correct again! We then explained that beneficiaries only come into play at the death of the IRA owner.

Enter the "Grey Zone" Discussion

We described to them a potentially grey time in life, a time when an individual might become fully or partially incapacitated. This can happen at any time—early in life, late in life, on a surfboard, playing shuffleboard. It may last a short time or many years. It can happen in an instant or slowly creep up. It is during this grey time that a DPOA can be most valuable. Without it, even a spouse will have to petition the court for conservatorship of his or her spouse's IRA.

This story ended on a happy note. The couple went home, looked through their estate planning documents, and brought us back a copy of their DPOAs. It turned out that when they engaged the services of an attorney who specializes in estate planning, the attorney prepared their living trust and created DPOAs for each spouse.

We encourage you to have a DPOA as part of your overall estate planning. They aren't perfect for all situations and they aren't as comprehensive as a well drafted living trust. However, for retirement plans they are the best tool available. Hopefully you or your loved one will never enter the "grey zone" and need one.

Trackback Link
http://www.thehgroup.com/BlogRetrieve.aspx?BlogID=17607&PostID=1484641&A=Trackback
Trackbacks
Post has no trackbacks.

Archive


Recent Posts


Tags

Empire State Manufacturing Trade Balance The Budget Deficit Industrial Production Dow Jones Quarterly Reports Housing Starts Economic Indicators Vehicle Sales The Economy Average Earnings Trade Deficit MBA Mortgage Index Factory Orders Taxes In the News University of Michigan Account Balance Risk Management Building Permits Home Price Spending Tax Inversion Durable Goods Construction Spending Estate Planning Chicago PMI NASDAQ Weekly Hours Economy Payrolls Medicare Financial Planning Currencies Fiduciary Rule Income ADP Employment Retirement Planning Portfolio Management Fiscal Cliff Debt Health Insurance Obamacare Personal consumption expenditures Labor Costs Our Team Members Year In Review Bitcoins GDP Europe Home Sales Interest Rates Unemployment Rate NFIB Social Security Jobless Claims Conference Board Financial Markets Business Inventories Goods Trade Balance Average Workweek Capacity Utilization Scotland Global Markets Bonds International Monetary Fund Money Market Unit Labor Costs Employment Consumer Price Index The National Debt Quarterly Updates Helpful Hints Inflation The Eurozone Fed Beige Book Government regulation Import Prices The Fed Gold Politics Weekly Review Brexit Philly Fed Fun Millennials FHFA Retail Sales Continuing Claims Consumer Sentiment Case-Shiller Investment Planning NAHB Equity Education Planning Consumer Confidence IPO Insurance JOLT Question of the Week Weather, Gas Prices Nonfarm productivity Hourly Earnings Elections ISM Wholesale Inventories Fed Note The Stock Market Euro Producer Price Index General PPI Nonfarm payroll FOMC