In the event you become unable to manage your own finances, name someone you trust to take care of them for you. Having a Durable Power of Attorney for Finances allows you to name you want to take care of your financial matters when you cannot. If you become unable to manage your own affairs, the person you name will be able to step in your shoes and take care of matters without the added expense of unnecessary court proceedings like a conservatorship.
Below are some of the more commonly asked questions regarding a Durable Power of Attorney for Finances.
A Durable Power of Attorney is a written instrument executed by a principal (you) which authorizes someone else, called an attorney-in-fact, or agent, to act for the principal. A durable power of attorney lasts beyond the principal’s incapacity. The Durable Power of Attorney may be immediate or “springing”, that is the agent or attorney-in-fact’s power will only become effective at a specified future event or upon the subsequent incapacity of the principal.
A Durable Power of Attorney protects you in the case that you become unable to care and manage your own property and finances. Once you become unable to care for your finances, the person you name in this document will have the power to manage your affairs for you.
What is the difference between a Springing Durable Power of Attorney and an Immediate Durable Power of Attorney?
A springing durable power of attorney is one that only becomes effective once one or more designated people have determined that some event or contingency has occurred. For example, it is common for people to have the written opinion of one or two licensed physicians stating that they lack capacity to carry on their own financial affairs.
Springing durable powers of attorney are popular because you do not have to give up or share control immediately while you have capacity. Only when you need assistance will the agent or attorney-in-fact selected by you have the power to help you manage your affairs.
An immediate durable power of attorney grants power in your selected attorney-in-fact or agent immediately, regardless of whether you are incapacitated. These are effective in situations where you might be undergoing a surgery and will be recovering for a significant period of time or where you are very elderly or ill and it is likely you will need assistance in the near future.
You generally grant broad authority to your attorney-in-fact in a Durable Power of Attorney for Finances. While you can always limit the power you give your attorney in fact, if you become incapable of handling your own affairs, it is usually most efficient for your attorney in fact to have broad powers. Regardless of whether you limit the authority of your attorney in fact, the person you select to handle your affairs should be someone you trust.
In general, your attorney in fact, or named agent, will have the power to deal generally in real estate transactions, tangible personal property transactions, stocks and bonds, commodities and options, manage your banking and other financial institution transactions, manage your business, manage your insurance and annuity, represent you in court, and handle your tax matters.
You should have two people who you would like to serve as your attorney-in-fact, a primary person and a back-up person. It is usually best to have the individuals named consecutively, so that if one cannot serve as your attorney in fact, the power will vest in the second person named.
While you can name two people to serve as attorneys-in-fact together, this is often not in your best interest as it may become difficult for them to carry out their duties as the unanimous consent is required for all transactions and disagreements may arise between the two selected individuals.
An attorney in fact is entitled to reasonable compensation for services rendered and to reimbursement for reasonable expenses incurred. You can specifically provide that the attorney-in-fact is not to be compensated, as many do in the case of family members and friends serving as the attorney in fact.
An attorney in fact has the legal duty to act as a prudent (sensible, rational) person would in dealing with the property of another.
If an attorney in fact has special skills or experience or was designated to be the attorney in fact based on some representation of special skills or expertise, the standard of care required by the attorney in fact will be based on others with similar skills or expertise.
You should give a copy of your Durable Power of Attorney for Finances to your attorney-in-fact and your alternate attorney-in-fact. You should record the document in a county where you own real property.
As of July 1, 2000, a Durable Power of Attorney for Finances will not expire due to a lapse in time since its execution. It may be easier for third parties to accept your Durable Power of Attorney if you update it periodically, around every three years. This will entail only a re-signing of the previous document (which is updated to reflect any changes in the law) and can be done at little expense.