Protect Your Finances in Retirement with a Durable Power of Attorney

Planning ahead for potential incapacity is an important part of comprehensive financial planning. For seniors, understanding how to protect your finances if you're unable to manage them yourself is a practical consideration as cognitive changes can occur with age. Whether related to natural aging, medical conditions, or other factors, having a plan in place can help protect your retirement savings. One legal tool that may help is a Durable Power of Attorney (DPOA).

In this article, we'll explore why a DPOA may be an important consideration for seniors, how it can help protect your finances, and practical steps to discuss with your attorney. By the end, you'll understand how this document can be an important part of your retirement planning.

At Daner Wealth Management in Alpharetta, GA, we help clients coordinate their financial planning with their broader estate planning goals. Marc Daner, CFP®, ChFC®, has over 30 years of experience helping families navigate complex financial decisions. As a fiduciary, we are committed to acting in your best interest when providing investment advice. While we do not provide legal advice, we can help you understand how estate planning documents like a DPOA fit into your overall financial plan and coordinate with your estate planning attorney.

What Is a Durable Power of Attorney?

A Durable Power of Attorney is a legal document that lets you appoint someone you trust—called your "agent" or "attorney-in-fact"—to manage your financial affairs if you become incapacitated. Unlike a regular Power of Attorney, which may lose its power if you can't make decisions, a DPOA is designed to remain effective, helping to ensure your finances can be managed even if you're unable to act.

How Does It Work?

When you create a DPOA, you decide what your agent can do. Options typically include:

• Broad Authority: Handling everything from paying bills to managing investments.
• Limited Powers: Specific tasks like selling a house or filing taxes.

You can also choose when it takes effect—immediately or only if a doctor confirms you're incapacitated. This flexibility makes a DPOA a customizable tool for your retirement planning. Consult with a qualified attorney to understand your options and ensure your DPOA meets your state's legal requirements.

Why Seniors May Want to Consider a Durable Power of Attorney

Aging can bring increased risks of cognitive changes, which may affect your ability to manage finances. Without a DPOA, your family might face challenges accessing your accounts or making decisions on your behalf, potentially leading to delays or legal proceedings. Let's look at some considerations.

Cognitive Changes: A Planning Consideration

Cognitive changes can occur for various reasons. Some research suggests that certain medical procedures may affect cognitive function in older adults:

• Some studies have examined postoperative cognitive changes in older adults following surgery.
• Research continues to explore the relationship between various factors and cognitive health in aging populations.

Note: Daner Wealth Management does not provide medical advice. The information above is for general educational purposes only. Please consult with qualified healthcare professionals regarding any medical concerns.

These considerations highlight why planning ahead can be valuable for protecting your financial interests.

Financial Planning Considerations

When cognitive changes occur, there can be financial implications:

• Care Costs: Long-term care can be expensive. According to the Genworth 2023 Cost of Care Survey, national average costs for nursing homes were approximately $116,800 annually for a private room, while assisted living averaged $64,200 per year. Costs vary significantly by location and facility.
• Account Management: Difficulty managing accounts can lead to missed payments or other challenges.
• Legal Proceedings: Without proper planning documents, families may need to pursue court proceedings (such as guardianship) to manage finances, which can involve legal fees and delays.

Illustrative Example

Consider this hypothetical scenario: A 75-year-old retiree experiences cognitive changes after a medical procedure and has difficulty remembering account information. Without a DPOA in place, family members may face challenges paying bills or accessing savings for care needs. A DPOA could have allowed a designated agent to step in and manage these matters. (This is a hypothetical example for illustrative purposes only and does not represent an actual client or guaranteed outcome.)

How a Durable Power of Attorney May Help Protect Your Retirement

A DPOA can be an important planning tool. By naming a trusted agent, you may help ensure:

• Bills Can Be Paid: Helping avoid late fees or credit issues.
• Investments Can Be Managed: Your retirement savings can continue to be overseen.
• Assets Can Be Protected: Reducing the risk of mismanagement.

It's a proactive approach to planning that can provide structure for your family during challenging times.

Setting Up Your Durable Power of Attorney: Steps to Discuss with Your Attorney

If you're considering a DPOA, here are steps to discuss with a qualified attorney:

1. Choose a Trusted Agent

Consider someone reliable—like a spouse, adult child, or trusted individual—who understands your goals and can handle financial responsibilities.

2. Consult a Qualified Attorney

An attorney can ensure your DPOA meets your state's legal requirements and reflects your specific needs. While template forms exist, professional legal guidance helps avoid potential issues.

3. Define Powers

Work with your attorney to decide if your agent should have broad authority or specific, limited duties. You can also specify when the DPOA takes effect.

4. Follow Your State's Requirements

Each state has specific requirements for executing a DPOA. In Georgia, for example, there are specific signing and witness requirements. Consult with a Georgia-licensed attorney to ensure your document meets all legal requirements.

5. Review and Update as Needed

Review your DPOA after major life changes (e.g., divorce, death of your agent, significant health changes) to keep it current.

Beyond DPOA: Additional Planning Considerations

A DPOA is one component of comprehensive planning. Other tools that may complement your plan include:

• Healthcare Directives: Documents that specify your medical care preferences.
• Long-Term Care Planning: Strategies to address potential care costs.
• Simplified Financial Management: Consolidating accounts and automating payments to reduce complexity.

How Daner Wealth Management Can Help

While Daner Wealth Management does not provide legal advice, we can help you understand how estate planning documents fit into your overall financial plan. Our financial planning services include:

• Coordinating with your estate planning attorney to align your financial and legal planning
• Reviewing how your investment accounts and beneficiary designations work with your estate plan
• Helping you understand the financial implications of various planning strategies
• Providing ongoing support as your planning needs evolve

As a fiduciary, fee-only firm, we are committed to acting in your best interest when providing investment advice. Marc Daner, CFP®, ChFC®, has over 30 years of experience helping families in Alpharetta and surrounding areas navigate complex financial decisions.

Take Action Today

A Durable Power of Attorney can be an important part of your retirement planning. Whether you're preparing for a medical procedure or simply planning ahead, having proper documents in place can help provide structure for managing your finances.

Suggested Next Steps:

• Consult with a qualified attorney about drafting a DPOA.
• Consider who you would trust to serve as your agent.
• Review your broader retirement and estate planning strategy.

Planning ahead can help provide clarity for you and your family.

Coordinate Your Financial and Estate Planning with Daner Wealth Management

At Daner Wealth Management, we understand the importance of comprehensive financial planning that considers your estate planning needs. If you'd like guidance on how a Durable Power of Attorney and other estate planning documents fit into your overall financial plan, we're here to help.

Contact us today at (770) 368-6033 or marc@danerwealth.com to schedule a consultation. We can help you coordinate your financial planning with your estate planning attorney to work toward a comprehensive approach to protecting your financial future.

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This content is for educational purposes only and should not be considered personalized financial, tax, legal, or medical advice. All investments involve risk, including potential loss of principal. Past performance does not guarantee future results.

Daner Wealth Management does not provide legal or tax advice. The information provided about Durable Power of Attorney and estate planning is general in nature and should not be relied upon as legal advice. Please consult with a qualified attorney licensed in your state for guidance on legal documents and estate planning matters.

Daner Wealth Management does not provide medical advice. Any medical information referenced in this article is for educational purposes only. Consult with qualified healthcare professionals regarding medical decisions.

Third-party data and statistics cited in this article are believed to be reliable but are not guaranteed and may change. Costs and legal requirements vary by location.

Any examples or scenarios presented are hypothetical and for illustrative purposes only. They do not represent actual clients or guaranteed outcomes.

Please review our Form ADV Part 2A for important disclosures about our services, fees, and conflicts of interest.

External links are provided for convenience; Daner Wealth Management is not responsible for content on third-party websites.

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