A prospect’s son called me last week, informing me that he was his father’s Power of Attorney. He told me that he had responsibility for his father’s financial affairs, and it was important that I was aware of that. The implication was that I was wasting my time talking with his father because he controlled the purse strings.
A brief summary of what a Power of Attorney is – it’s very broad and provides extensive powers to the person or organization you appoint as your agent. These powers usually include:
• Handling banking transactions
• Entering safe deposit boxes
• Handling transactions involving U.S. securities
• Buying and selling property
• Purchasing life insurance
• Settling claims
• Entering into contracts
• Exercising stock rights
• Buying, managing or selling real estate
• Filing tax returns
• Handling matters related to government benefits
In earlier conversations with his father, I really enjoyed explaining to him that there were options to obtain cash now from his life insurance policy, and that he’d no longer need to make future premium payments once he sold his policy. We talked about the trade-offs in receiving cash now versus his children receiving the proceeds of his life insurance policy at his death. He was uncertain how he should proceed, but he knew that a discussion with his family was important.
In our discussions, he explained how proud he was to have served his country and put his four children through college. That included paying for master’s degrees for his children. (Oftentimes when there are disagreements among the family, when the children don’t want their parents to sell the life insurance policy because they don’t want to lose their inheritance, I suggest that the parents request that their children begin making the premium payments. It’s funny how quickly this changes the decision.)
The son who called me was a professional manager, receiving his MBA from a Big10 university. This conversation reminded me of my days managing a $200 million bond fund for my bank-employer 35 years ago. I thought I was fairly knowledgeable about financial affairs at the time. What I didn’t know, managing corporate funds with specific parameters, does not correlate to managing one’s personal financial affairs.
Being a Power-of-Attorney provides rights to conduct financial and other transactions for individuals. It does not prohibit the individual to make their own financial or legal decisions, or to transact business for themselves. (A Power of Attorney is like an extension of you, where you retain capacity to act for yourself. The Power of Attorney is to act in your best interest.)
Be certain you have sound financial advisors. No one individual has knowledge of personal and corporate financial strategies. They are very different. Also, don’t allow friends, family or business associates let their life insurance policy lapse without considering other options. If you’d like to consult on financial matters, or obtain a second opinion, please feel free to contact me anytime at www.BrightPathFinancialCorp.com.