No one can predict the unexpected, but you can be prepared. When it comes to your investment portfolio, having both a TCP and a POA in place provides an added layer of protection when the unforeseen occurs.
What is a TCP?
A TCP, or Trusted Contact Person, is exactly what it sounds like: someone your advisor can reach out to if they are unable to contact you directly.
A TCP cannot provide instructions or make decisions on your behalf, and your advisor cannot share confidential information with them. However, if your advisor is unable to reach you, they may contact your TCP to help determine why and to confirm your current contact information.
For example, if you are travelling and temporarily unreachable, your TCP can inform your advisor. If the situation is urgent, they may also help your advisor reconnect with you.
What is a POA?
A POA, or Power of Attorney, is someone you legally authorize to make decisions on your behalf.
Unlike a TCP, a POA has authority over your accounts and can act for you when you are unable to do so yourself, typically due to physical or mental incapacity. Because of this level of responsibility, choosing a POA requires a high degree of trust.
The Difference Between TCPs & POAs
The best way to remember the difference between the two is in their names:
TCP (Trusted Contact Person): someone your advisor can contact only
POA (Power of Attorney): someone with the power to make decisions if you can’t
Another key difference is how they are established. A POA is created through a legal document prepared with your lawyer and is intended for potential future use. It typically only comes into effect when you are deemed unable to make decisions or sign documents on your own.
What Are the Consequences of Not Having a TCP & POA?
If you do not have a TCP, important or time-sensitive decisions may be delayed until you can be reached. If you don’t have a POA, your loved ones may need to petition the court to have one put in place, which can be time-consuming and costly. Often, the reasons a POA needs to be put in place are medical ones. Medical changes, especially severe ones, can come with bills, medications, therapy, and nursing care. Without a POA, these services may be delayed or paid out of pocket by family and friends until one is established.
To save precious time and stress, ensure both your TCP & POA are up to date and on file with your financial advisor or Portfolio Manager.
Being prepared today can prevent unnecessary stress tomorrow. If your TCP or POA information has changed, contact us at KLT Wealth Management to have it updated or bring it to your next annual review.
