Estate planning 

Power of Attorney

May 9, 2022

John Brennan, Senior Vice President of Trust and Financial Services at Cape Ann Savings Bank in Gloucester, Massachusetts talks about the role of a power of attorney in estate planning. He talks about how to select, establish, and utilize a power of attorney.

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Podcast Transcription:

Transcription Disclosure: Below is a transcript of the conversation between John Maher and John T. Brennan. Please note, this is an unedited "word for word" rendition of the actual conversation and is not intended to be grammatically correct.

John Maher: Hi, I'm John Maher. I'm here today with John Brennan, Senior Vice President of Trust and Financial Services at Cape Ann Savings Bank in Gloucester, Massachusetts. Today, our topic is estate planning and powers of attorney. Welcome, John.

John Brennan: Hi, John.

What Is a Power of Attorney?

John Maher: So, John, what is the power of attorney?

John Brennan: So, a power of attorney is... think about it this way. If you were unable to act, who would you want to act in your stead? If you were unable to write your checks, if you were unable to go to the bank, if you were unable to... if you're paralyzed from the neck down, that person who can act on your property. The powers created or delineated by a written power of attorney is a person who has the authority to act on your behalf. So, that power of attorney is really what it sounds like, I suppose. It's someone who has the legal authority to act on your behalf.

Why Is a POA Important in Estate Planning?

John Maher: Okay. Why is that an important part of an estate plan?

John Brennan: Well, when we say estate plan, as I mentioned on one of the earlier podcasts… An estate plan is also really a disability plan. It's an in-case-of-emergency-break-glass plan. So, the power of attorney is that if you were disabled and unable to make decisions, or business decisions for yourself, that somebody could step in and do that for you.

Spouses typically have it for one another, kids sometimes have it for elderly parents. Someone in a position of... it's a fiduciary relationship, really. Actually yeah, I think it is. In truth, it is because that person enjoys tremendous trust and confidence to be in that position, and under various circumstances, they are you. So, obviously you want to make sure that they're trustworthy and in your corner.

How to Choose Your Power of Attorney

John Maher: Right. So who should have the power of attorney then, and how do you grant that to them?

John Brennan: You do it by writing, okay. Again, it's really part of an estate planning suite. The various things we've talked about will, trust, power of attorney and some of the healthcare documents are usually part of an estate planning suite. You get to work with an Attorney, because it completes the suite of legal powers you might need, if you were a vegetable or something awful or something terrible happened. So, that's why it's really part of the estate plan.

How Do You Set Up a Power of Attorney?

John Maher: How do you go about setting that up? You have to just talk to your attorney about that?

John Brennan: Yes, you would talk to your attorney about that. You'd really probably want to talk to the person who is going to be your durable power of attorney. With spouses, it's easy. When it gets into people who are single, it can be a little more fraught because it requires tremendous trust and confidence and it also couldn't equate to a loss of privacy.

And some people might be great in a hospital setting and might make the right decisions for you there, but they might not have a mind for business, and if you have a complicated situation, you want the right person in that place.

Sometimes, unfortunately, negative examples provide some interesting fodder for understanding what a durable power of attorney is. And you can read… certainly on the sports pages, there are examples of athletes with tremendous amounts of money. They're young, they're full of confidence and sometimes lack business sense… There's examples of them giving powers of attorney to financial advisors, who don't always look out for their best interests. So that's where you can get trouble because those documents have power.

Can You Split Up the Power of Attorney?

John Maher: Do you know if you can split up your power of attorney? Like if I could say, "Hey, for healthcare things, my power of attorney is this person but when it comes to my business, I'd rather have this person have the power of attorney to make decisions about my business." Or, things like that.

John Brennan: Yes. There's a natural split between health and business. Now I know we're going to talk about healthcare proxies. Healthcare proxies really relate to health, powers of attorney really delineate financial powers, okay.

And you could give a power of attorney to somebody where you say, "Handle this real estate closing for me, you're my stand in." Sometimes, we at the bank might get a power of attorney, which allows us to bring property over into a trust, but it really might be limited to that.

The other thing too, just to be aware of with a power of attorney is that, obviously if you walk into any bank with a stack of papers and say, "Hey, I'm a power of attorney for so-and-so, give me their money" that exposes institutions to risks. So a lot of institutions won't honor a power of attorney, if you don't also go through an internal process that they might require.

So, somebody might have a power of attorney for their grandparent, but you know, Fidelity, for example, is not necessarily going to honor it unless they're convinced it's real and genuine. So that is something just to be aware of, as these things are put in place, you want to both have a legitimate power of attorney, which speaks to the acts you want your durable power of attorney to do. And then you want to make sure that it's really clear to the institution where you see somebody might be acting and exercising it.

How to Use Your Power of Attorney

John Maher: Okay. Any final tips or thoughts on powers of attorney and how they relate to your overall estate plan?

John Brennan: The biggie is making sure it doesn't just hang in the binder. If you're a power of attorney for your elderly mother, you want to make sure her financial advisor who she talks to on a regular basis is aware of you, knows you, has seen the power of attorney, is on file and it's ready to go.

The bank that she goes to on a regular basis, has seen the power of attorney, hopefully met you, it's on the file, it's there in the file, it's ready to go. So it's really not enough with a document like that to just have it, you want to make sure you've rolled it out at the places where you might need it and it's there in place, in case it has to be exercised.

John Maher: All right. That's good information, John. Thanks again for speaking with me today.

John Brennan: Sure. Thanks, John.

Contact Cape Ann Savings Bank Today

John Maher: And for more information, you can contact Cape Ann Savings Trust and Financial Services at 978-283-7079 or visit the website at capeannsavings.bank.

Investments purchased through the Cape Ann Savings Trust and Financial Services Department are not FDIC insured, not FDIC guaranteed, not bank guaranteed and may lose principal value.