Many people make the mistake of believing that if they have a Power of Attorney they do not need anything else. This type of thinking is wrong and can cause you a great deal of problems later.
A Power of Attorney is certainly an important element of a solid estate plan, but it is no replacement for an estate plan. One of the main reasons why you cannot replace an estate plan with a Power of Attorney is that in real life, this document does not always work the way it is meant to. While it will work great with some institutions, others will not honor it at all.
If all you have is a Power of Attorney, chances are when it needs to be used your appointed agent will run into some problems. When your agent takes the document into a social service agency to try and apply for Medicaid or Social Security benefits, they are probably not going to have any difficulties; these agencies usually honor a Power of Attorney. Where your agent will probably encounter some problems is with financial institutions, such as banks and brokerages.
When your agent takes your Power of Attorney document into the bank, they may honor it or they may not. Some banks will give you no problems while others will want it to be examined by their legal department before they honor it, and this will probably take a lot of time, if it is every done at all.
With brokerage firms the problem is even worse; most of the time they will barely look at a Power of Attorney that is drafted by an outside lawyer. They want the Power of Attorney document signed and notarized in their office.
To avoid these potential problems it is best to keep in mind that you do need a Power of Attorney, but you will want a complete estate plan to ensure that you have covered all of the bases. An experienced estate-planning attorney can help you to form a plan that will reduce the risk of problems when you need that estate plan to work for you.