Power of Attorney (Financial)
A Financial Power of Attorney (sometimes called a “General Durable Power of Attorney” and commonly just a “Power of Attorney”) is a written document in which you give another person authority to handle your financial affairs if you become incapacitated (i.e., you are mentally and/or physically unable to handle your affairs yourself). The person to whom you give financial authority is called an “agent” or “attorney-in-fact.” Typically you will name a relative or friend to act as your agent. The person does not have to be an “attorney,” just someone you trust, and that is willing and able to act for you.
If you are incapacitated, the person you appoint in your Power of Attorney must only take actions that are in your best interest. Your attorney-in-fact is strictly obligated to make decisions and use your money and property only for your benefit, and those who are dependent upon you. Making a Power of Attorney ensures that someone you trust will be on hand to manage the many practical, financial oriented tasks that will require attention if you become incapacitated.
If you do not have a Power of Attorney and you become incapacitated, your relatives or other loved ones will have to ask a judge to name someone to manage your financial affairs. The person appointed to manage your finances is called a conservator. Conservatorship proceedings can be expensive and embarrassing. Your loved ones must ask the court to rule that you cannot take care of your own affairs—a public airing of a very private matter. Court proceedings are matters of public record. If relatives fight over who is to be the conservator, the proceedings will become even more disagreeable, sometimes downright nasty, and will necessarily involve significant court and legal fees.
Having a Power of Attorney will help avoid the need for a conservatorship and minimize if not avoid the expense and delay of having your financial affairs handled by someone else if you are not able. A Power of Attorney is a good idea for almost everyone. For example, you may be hospitalized for a brief period of time and need someone to deposit your checks in the bank or pay your bills. As long as you are capable of making decisions, the other person must follow your directions. Or, you may suffer from a more permanent or long-term disability and need someone to make more extensive decisions for a longer period of time. In either event, having a Power of Attorney is the most effective way of keeping control of your finances and keeping the legal systems out of your affairs.