There is a very high likelihood that your retirement accounts are in big jeopardy – and I don’t mean the TV show. That’s true even if you’ve selected the right beneficiaries.
The problem I’m talking about is your ability to tap that money should you become incapacitated. If you become disabled and are unable to sign your name for any reason you could lose access to your retirement money exactly when you might need that cash most. Aye Carumba!
Who Does This Impact?
Very probably you. If you don’t take the simple steps to safeguard yourself and you do become disabled, your kin will have to be appointed by the court before they can use those retirement bucks for your care.
Who May Not Have To Worry About This?
The only way to escape this problem is to have a Durable Power Of Attorney that specifically appoints another party to manage your financial affairs, including your retirement accounts, should you lose capacity to manage them yourself.
If you have a living or family trust, you might already have what’s called a “Springing Power of Attorney”. This is a POA which becomes effective the moment you are unable to manage your own financial life.
The trick is, the document must be a Durable Power of Attorney (one that stays in effect even if you become disabled) and it must grant another person the powers of attorney over retirement accounts.
On top of that, the custodian or brokerage that houses your retirement accounts must recognize and accept the legal authority of that POA. If you don’t have a POA and/or your living trust doesn’t include this Durable POA, you need to fix that “muy pronto”.
What You Should Do
If you have significant assets in your retirement accounts, you have to make sure this problem doesn’t threaten you and your family. Fortunately, this is easy to solve.
1. Check With Your Custodian
Most custodians require you to have a durable power of attorney in order to cover this problem and most custodians won’t supply a blank POA form to you. Call your retirement department and ask what documentation they require in order to appoint another person to manage your retirement accounts should you become disabled.
Make sure to tell them that you want that person to be able to withdraw money from the account for your benefit should you become disabled. If they confirm that they need you to have a Durable Power of Attorney, make sure they accept such documents prepared by third parties.
2. Call Your Lawyer If You Already Have A Trust
When it comes to issues like this, spend a few shekels and make sure your bases are covered. If you have a trust, find out if that trust has a Durable Power of Attorney included and if it specifically appoints another party to fully manage your retirement accounts should you become disabled.
3. Create a Durable Power Of Attorney If You Don’t Already Have One
You should always consult with a qualified attorney before you take action on these matters. But just because you consult with a lawyer doesn’t mean you have to use one. If you don’t have the required POA, you can use your lawyer to draft one or you might use a legal service to save some dough. It depends on how comfortable you are and the level of complexity involved.
But remember. Be careful about who you appoint as Power of Attorney. Remember, this person will have full access to your money the minute you are disabled. We’re talking about a high level of trust here friend.
Once you take these three steps you can sit back and relax. Obviously I hope you never need to use your POA but it’s important to have one there just in case.
Will your retirement assets be available in case you become immobilized? How do you know?