Attorney Thomas B. Burton, of Burton Law LLC, is joined by Attorney Matthew Underwood, of Underwood Legal, LLC in Madison, Wisconsin and together they answer a reader's question about Power of Attorney and Why Does a Power of Attorney End When You Die?
Want to know what type of estate planning documents are best for your situation? Download a free copy of my easy estate planning guide.
Obtain Your Free Will vs. Trust Estate Planning Guide.
Subscribe to Attorney Thomas B. Burton, Burton Law LLC Channel: http://bit.ly/BurtonLawLLC
Thomas: welcome back! Today, I'm joined again by Attorney Matthew Underwood, an estate planning attorney in Madison. Matt, thanks for coming back on.
Mathew: It’s my pleasure. Thanks for having me Tom.
Thomas: And today we've got another tough question that I’ve saved for you Matt and this is what I see come up a lot in my practice and it is ‘why does a power of attorney document end when the person dies?’ The person who created it.
Mathew: yeah, that’s a great question and it's another one of those areas that we see some confusion on. Because if we are talking about wills and power if attorney, sometimes it's hard to know when does one document start, when does the next one begin, you know where those documents overlap.
So I think when we're looking at Powers of Attorney, those are documents that apply during somebody's life time. So the powers of attorney will protect you if you're incapacitated or if you need somebody to make decisions for you, if you're unable to make some yourself and there's Financial Powers of Attorney that cover, you know, paying bills, cashing checks, managing finances. There's also a health care Powers of Attorney. They cover medical decision making, so it's important that people have both. You really need that planning in place to cover finances and health care decision-making during your lifetime. So in as far as you know, how do we know when those Powers of Attorney and then now we have you know, a different set of documents pick up, you know, those Powers of Attorney do terminate when the person who created those, sometimes that's called the principal. When that principle passes away, those Powers of Attorney go away essentially and when we're talking about financial issues, once that power of attorney goes away, when that principal passes away, that’s when the will comes in to the play or trust, so in other words when that power of attorney goes away, but we have some other documents to cover that person after their death. So there's actually a Wisconsin statute on this and this is 244.10, if anyone of you wants to look that up and in Wisconsin has the uniform power of attorney for finances. So this is you know, applies in a number of different states, but that statute actually says that that power of attorney goes away when that principal passes away. So our elected officials created this law and it's codified in statute, so we know that, so that's what's going to happen when that principle passes away.
So again, it's important that when we're talking about estate planning, it's usually not good enough to just do Powers of Attorney because that doesn't cover people when they pass away. It's not enough to just do a will because wills go into effect when people pass away, but we really need to have that spectrum so that we need to have that lifetime planning and then after death planning, so that's what I would say on that Tom. Is there anything that you would add or things that you see in your practice about this?
Thomas: Okay, so Matt, I see this, I get this question a lot and sometimes you'll see it posted in the forums to someone will say, “I am the power of attorney for my mother and she just passed away and the bank won't let me access her accounts now to pay for the funeral or the flowers”, you know, “I got to get this going” and I often feel for these folks because they're just trying to take care of Mom's wishes and they were paying the bills for Mom. Let's say the last three years of her life, right? Because they were the power of attorney and it's very confusing but then she died. Why don't they have the authority anymore? So can you, you just went through why it ends at when they die, but what you know, what do they need to do next to get that power to pay for the funeral?
Mathew: Yeah, so that's a good point because you know, when that power of attorney ends, when that principal passes away, you know, that's really it. We can't revive that power of attorney. We have to use some other sort of tool to get that done. So there's three, kind of common, you know, ways that we see that handled.
Number one is maybe a power of attorney is all that person had in which case when they pass away, they really don't have any other planning documents and that's where we end up in Probate Court. That's where The state of Wisconsin will dictate where that person's property goes and to your point Tom, when we need to pay some bills whether it's funeral, mortgage, you know, the utility bills and when we don't have any other planning documents, we have to go to court and we have to wait for that court to issue letters of authority to that family member or whoever's going to handle things. That letter of authority is also called a ‘Domiciliary Letter’ in Wisconsin and there can be a delay before that family member receives that from the court. You know, commonly, we are looking at a period of weeks to even you know, months to get this letter of authority. So it's better if we have some planning in place. So we don’t have to do that. And just quickly, if they have a, if the person who passes away, has a will then there will still have to go to Probate Court. We still have to wait for that letter of authority.
So whether you have no plan after you pass away or whether you have a will you know, there's some process to go through. The other thing that people do and if you have enough planning and time to plan for this, you can set up something like a revocable living trust and in that way, when that person passes away, that revocable living trust actually continues on, so that revocable trust doesn't terminate, that lives on and then that trustee, whoever that person named as their successor trustee will manage that trust, they can take money out of the trust and pay for a funeral or other expenses.
So if you want to make sure that you're giving them most amount of control to your trusted family members, trust is probably the way to do that and that will not only cover that during their lifetime but also when they pass away.
Thomas: exactly, thank you Matt. Yes. So like I said that question comes up a lot. I wanted to cover it for our viewers because it is in my opinion, it is confusing, people get used acting as agent for Mom and they're very surprised when their death, effectively, death terminates that agency relationship.
Okay, and then you've got to go to court like Matt saying, to get new paperwork to act after that, and if you don't want to have that terminate, the answer is to do a trust that flows through that entire process. You can have the same person do it all during life and after you're gone.
So great question to the viewer. Thank you for asking. I hope this was helpful to the other viewers, trying to wrap your heads around that agency power under a power of attorney.
Matt. Thank you for joining us.
Mathew: Thanks for having me Tom. Always a pleasure.
Thomas: and we'll see you all next time.
© 2020 Burton Law LLC. All Rights Reserved. Transcript and captions provided for ease of access for the hearing impaired. For questions about this topic, or to suggest a topic for a future blog post, please contact the office.