What happens if you don’t have a Durable Power of Attorney for Finances?
If you do not have a Durable Power of Attorney for Finances and you become incapacitated, your spouse, relatives, or friends may have to go before a judge to get authority to handle your financial affairs. If this is the case, a probate court public hearing will be required over what is most certainly a very private matter. Like any court proceeding, it can take a significant amount of time, involve lawyers, and considerable expense. If the Court does appoint an agent to handle your financial affairs, your right to handle your own financial affairs will cease to exist. Even after the Court appoints an agent (which the Court calls a Conservator), you must still deal with other hassles. Your Conservator will probably be required to post a bond, which serves as insurance in case the Conservator steals or mishandles your property. The Conservator will still need to get Court approval for certain transactions involving your financial affairs. A Durable Power of Attorney can eliminate these unfortunate scenarios and is, therefore, a great gift to your family. A Durable Power of Attorney is almost always needed as a valuable part of any thorough estate plan.
Durable Power of Attorney for Finances
A Durable Power of Attorney for Finances is a document in which you designate someone to make financial decisions for you. A “Durable” Power of Attorney differs from a regular Power of Attorney in that it remains valid even if you become incapacitated and cannot make decisions for yourself, which is usually the time when it is most needed! Many people give their financial agent broad power over their finances. However, you can give your agent as much power or as little power as you wish. For example, some people limit the ability of their financial agent to give money and property to themselves or others. There are two types of Durable Powers of Attorney. An “immediate” Durable Power of Attorney goes into effect as soon as you sign it. The person you select as your agent will immediately be able to make financial decisions on your behalf, even if you are able to make the decisions yourself. A “springing” Durable Power of Attorney only goes into effect after one or two doctors indicate that you are incapacitated.
When does it end?
A Durable Power of Attorney ends when you recover (if it is a springing Durable Power of Attorney) or when you die. Once you die, your agent’s authority over your financial affairs ceases. You will need another estate planning document to pick up where it left off (usually a will or a trust).