Recently I have been fielding a number of questions about trusted contacts versus powers of attorney versus wills & beneficiaries, so I thought we spend a few moments today clarifying things.

A Trusted Contact is someone who is listed on your account who I can call (or your investment provider, like TD Ameritrade can call) if something appears to be out of the ordinary with your account.  Now this means something REALLY unusual so here’s an example:  You’ve been a long-time client, we’ve done our planning work, you take money at a fairly structured pace and all of a sudden, you start to call asking for unexpected chunks of cash with very little explanation – far more than “I need to replenish the cash reserve since the fridge died” and closer to “don’t ask” and amounts you’d need a newly acquired crack habit to support.  The Trusted Contact would be the person who I would call and say “Hey, is there anything going on with Aunt Mary that I should know about???”  This person can’t access your account nor can they give me instructions regarding your money – they are simply someone we can use to make sure you are OK and aren’t being taken advantage of.

A Power of Attorney, on the other hand, carries a whole lot more weight.  Someone could (in theory) walk through my door with a signed POA for your account and give me instructions to make investment changes, transfer the dollars to Kathmandu, or start an income stream to a completely different person or bank account than yours.  This is one of the reasons you want to make sure you trust whomever is your Power of Attorney.  Now, since I’m fairly protective of my clientele, somewhat obstinate, and not always the most trusting of people, if I don’t know this person and/or already have a copy of your POA on file, I won’t be doing any of those things without some verification from you but, by law and if push came to shove, I would be obligated to follow that person’s instructions.

Ironically, that being said about the POA, I can’t actually call that person if I think something’s wrong – I can only call the Trusted Contact.

Both of these contacts are for when you are living and breathing, even if you have no idea what day it is or what planet you are standing on.  If you are no longer with us, both spiritually and physically, that’s where the will and your beneficiaries kick in.  IF you have beneficiaries listed on your accounts then all they need is a death certificate and we can settle the account out to them.  This is regardless of what your will says – the beneficiary designation supersedes the will.  If you have disowned one of your kids/grandkids in your will but forgot to update your beneficiary designation then little Johnny/Janey is going to get his/her/their share of your account even though you didn’t want them to.  You could, of course, leave your accounts to “Your Estate” which means the instructions in your will take precedence, but know that by doing that, you’ve most likely adopted Uncle IRS, Uncle NYS, and Aunt Attorney as your heirs since the taxes/fees are usually higher than if we settle the accounts directly to your beneficiaries.  Something to chew on.

If push comes to shove, and you just don’t have the stamina to take care of all three, please do the Power of Attorney – that’s the one that is the most useful for your financials.  New York State changed the Power of Attorney (POA) form in 2022 – if you have an older one, it should still work but if you have an extremely old one, consider adding that To Do list.  If you stroke out on me, without that POA, I have no way of accessing your accounts easily to get you the help you need.  Of course, in full and fair disclosure, I’m not an attorney and this isn’t legal advice but I would be more than happy to chat with you and/or your attorney if that seems appropriate to you.

Now, I challenged all of you to think about something you might change given our current predicament so I thought it was only fair to share one of the things Linden will be changing. For existing clients I have been sharing my thoughts since 2020 through email; going forward I will continue with updates and more musings on this blog.  Happy reading in either setting!