Do I Need a Financial Power of Attorney?

An estate plan is more than getting your affairs in order before you pass away, it can also be about preparing just in case you are incapacitated by health issues. If you have income or property, you may want to seriously consider creating a durable financial power of attorney. This is where you name an "agent", someone you can completely trust, and this agent will have the durable power of attorney to conduct your financial matters if you are ever incapacitated. These financial matters include paying bills, depositing checks, issues with insurance, etc.

What happens if you do not have this power of attorney in place? If you are incapacitated, then your family members will have to decide who will oversee your financial matters. This means they will have to enter the conservatorship or guardianship process. This means that they have to publicly tell the court about how you are too incapacitated to take care of your finances, a tough time for your family, especially if there is fighting amongst relatives for the public, perhaps even in the local newspaper. It will be difficult and costly for your family, particularly as they may need to work with attorneys.

Still think you don't need a durable power of attorney for finances? Even if you're in any of the following situations, you should still reconsider:

• Are you married?
• Do you have a living trust?
• Do you own a joint tenancy property?

If property is held under your name, then your spouse does not automatically have the power of attorney if you are incapacitated. For instance, if a couple has been married for decades and they are co-owners of everything except the stocks, and the spouse who owns the stocks becomes incapacitated, the healthy spouse cannot sell those stocks in order to meet medical bills. And while you might have property in a living trust, your successor trustee cannot touch any matters outside of the trust; and you don't want all your property in a living trust. If you name an agent to have durable power of attorney, however, they can take care of all the daily finances. As for joint tenancy, the healthy joint tenant is limited in what they can do. For instance, if a joint tenant of real estate becomes incapacitated, the other tenant cannot refinance or sell the incapacitated tenant's portion of the property.

To be fair, a durable power of attorney may not be better than conservatorship or guardianship if you think there will be family quarrels, or you simply want the court to oversee your finances. It is not for everyone, but most people should at least look into a durable power of attorney. Find out if this is a good fit for your situation when you contact an estate planning lawyer today!