Do You Need a Power of Attorney?
A power of attorney, otherwise referred to as a POA, is a legal document that gives someone the power to act on your behalf. In the case of a durable power of attorney for finances, you are selecting someone you know and trust to act on your behalf and manage your financial affairs if you are ever unable to make decisions for yourself, like in the event of illness or severe injury.
Who should have a power of attorney?
Anyone and everyone with a property or income, or both, should consider having a financial power of attorney as an important piece to their estate plan. This is particularly true if you’re someone with known health issues that could at some point make it difficult or impossible to handle your own financial affairs.
Having a durable power of attorney means that someone you trust can more quickly and easily step in and manage your finances for you; including seeing to it that your bills are paid on time, any bank deposits are made on your behalf and without delay, and that any important financial and medical paperwork is appropriately handled.
Really, no matter what your situation is; single or married; wealthy or not, having a durable power of attorney is generally inexpensive and can save you and your family time, money, and embarrassment by keeping your private matters out of the court and public eye.
For those who are married…
When you’re married you may not think you need a power of attorney, after all – your spouse does already have certain rights when it comes to shared property and holdings. But, did you know there are some significant limitations to what one spouse can do with joint property without the consent of the other spouse?
So much so that in the event a property or holding needed to be sold, your spouse could not sell it without your consent – and if you’re incapacitated, you cannot legally give your consent. This can put both of you in an uncomfortable position and hinder your spouse’s ability to care for you and handle both of your affairs. If you have property or holdings that you own individually, they have virtually no control over them whatsoever without a power of attorney in place or a court ruling.
For those who are single or widowed…
Just as with married couples, for those who are single or widowed, with regards to any property you own jointly, that other person is limited in their ability to control the assets on your behalf if you are incapacitated.
If you’re like many single people and you own the majority of your property and holdings individually, then in order for anyone to act on your behalf you must have a power of attorney in place or the court must rule you incapacitated and assign someone to act on your behalf – and this may or may not end up being the same person you would choose.
If you already have a living trust…
Having a living trust in place can give you some of the same benefits as a durable power of attorney, but only as it applies to property held in the trust. The person named as successor trustee, who distributes and manages the trust in the event of your death, usually also has the authority to manage the trust if you become incapacitated. However, they do not have any authority over property outside the trust, and most people do not list every property, account, or holding they own in a living trust.
For anything you are full or partial owner of that is not held in the trust, if you become incapacitated and do not have a power of attorney in place, the same lengthy and expensive court process applies and a conservator must be named by the court to manage those other assets and oversee your affairs. This may or may not be the same person managing your living trust, it’s up to the court.
There are certain circumstances where a person may forgo a power of attorney and instead opt for the court to step in and supervise the distribution and maintenance of their finances.
While a power of attorney is a well-recognized legal document and anyone who contests it will face a lengthy legal battle, there are times when you may actually want to get the court involved. An example of this would be if you feel certain relatives or loved ones may challenge the representative you’ve named in your power of attorney to the point that it will interfere with their ability to manage your finances.
In this case, having the court rule and assign a conservator may be more suitable and provide assurance that no matter who is fighting over the right to act as your conservator, your personal welfare and financial affairs are protected and overseen by the court.
What happens if you’re incapacitated without a power of attorney in place?
If you do not have a durable power of attorney and you find yourself unable to handle your affairs, like in the event that you’re incapacitated, to make any progress your relatives or loved ones will have to get the courts involved.
This means the court will need to publicly rule that you are incapacitated and unable to manage your own affairs and then the court will choose who to appoint as the conservator of your estate. If there are multiple people requesting the position of conservator, the process can drag on, lawyers may be hired and the costs can begin to add up quickly.
To save yourself and your family the hassle and lengthy process of dealing with the court, you should consider downloading the necessary forms and setting up a durable power of attorney today.