Every adult should have a Financial Durable Power of Attorney and a Health Care Power of Attorney (also sometimes referred to as a Living Will, Advance Medical Directive, or Health Care Directive). Regardless of your financial circumstances, these documents are critical for anyone who wants to protect their own well-being and wants to spare their loved ones from likely pain and aggravation. If you are in an accident and you do not have these documents in place, a significant burden may be placed upon your family.
A Financial Durable Power of Attorney (often referred to simply as a Durable Power of Attorney) allows you to appoint a person (referred to as your agent) to make financial decisions on your behalf, access your financial records, and take appropriate action to handle your financial affairs.
If you become incapacitated, your loved ones may not be able to access the appropriate assets and records to manage your financial affairs. Especially in the event of long-term incapacitation, it is crucial that you have appointed an agent to handle your finances.
The Durable Power of Attorney will allow your agent to use your assets to pay for the day-to-day expenses of you and your family, such as paying the mortgage or rent, utilities, medical bills, and so on. It will also allow your agent to collect, on your behalf, any income which you may be entitled to such as Social Security, disability insurance benefits, or other benefits. The Durable Power of Attorney will also allow your agent o file and pay your taxes, manage your stocks, bonds, retirement accounts and so on. And, while your agent has broad powers, the agent is required to act in your best interests.
A Durable Power of Attorney can be drafted to be effective as soon as you sign it–this is commonly used by spouses so they may act on behalf of each other, for example, if one spouse is out of town. Alternatively, you may prefer to use a “springing” Durable Power of Attorney, meaning that it will not take effect until a doctor certifies that you are incapacitated. This creates a hurdle for your agent to obtain a doctor’s affidavit, but it can give you peace of mind if the idea of an immediately effective Durable Power of Attorney makes you uncomfortable.
Using a Durable Power of Attorney form from the internet is ill-advised. Many, especially those of the “check the box” variety, are too generic and may not be honored by your bank or other financial institutions. The internet document may not comport with the laws of your state of residence. In addition, it is important that the power of attorney contain the appropriate “durability” language. Without such language, a power of attorney will be ineffective upon your incapacity–the exact situation we are trying to protect!
If you do not have a proper Durable Power of Attorney in place and something happens to you, your family will be stuck with the frustrating, time-consuming and expensive process of having the court system appoint an agent on your behalf. The time to complete such a process can create financial hardship for your loved ones and may result in the appointment of an agent that you would not have selected for yourself. Take the time now to make sure that you and your family are protected.
See Two Legal Documents Every Adult Needs: Part 1 for more information on the Health Care Power of Attorney.