Durable Power Of Attorney For Financial Management

A durable power of attorney for financial management is a simple, reliable way to arrange for someone to make your financial decisions in the event you become unable to make them yourself.

A durable power of attorney for financial management is a document executed by a Principal. The Principal appoints another person, the Agent, to act on behalf of the Principal to manage the Principal’s financial affairs without having to resort to court proceedings (like a Conservatorship). The Agent has the authority to act on behalf of the Principal only if the Principal becomes incapacitated.

Definition Of A Springing Power Of Attorney

While the Principal can manage her own affairs, the document is ineffective and is dormant. If the document states that the power “springs to life” on the Principal’s incapacity, or at some other specified future time or contingency, it is a “springing power of attorney.”

Determination Of When The Power ‘Springs To Life’

One way to provide for determining when the principal is incapacitated is for the Principal to designate in advance one or more persons who have the power to determine her capacity conclusively. Physicians may be designated alone or jointly with others.

Consequences Of Not Executing A Durable Power Of Attorney For Financial Management

If a person becomes incapacitated without having prepared a durable power of attorney for financial management, a court proceeding (a Conservatorship) is probably inescapable. The person’s spouse, close relatives or companion must request authority from the court to manage at least some of the person’s financial affairs.

If the incapacitated person’s relatives go to court to have a conservator appointed to manage the person’s financial affairs, they must ask the judge to rule that the person cannot take care of his own affairs. Since the court proceedings are public, this could be embarrassing.

Conservatorship proceedings are also expensive. The court requires numerous fees, some that usually must be paid every year or two.

Although a conservatorship is not necessarily permanent, it can only be ended by the court.

Advantages Of A Durable Power Of Attorney For Financial Management

A durable power of attorney for financial management enables you to choose the person who will make important financial decisions for you and your family, should you be unable to do so yourself.
A durable power of attorney for financial management may help avoid the requirement of a conservatorship – thus saving you and your family money while protecting your privacy.

Duties Of The Agent

Usually, the Principal gives her Agent broad powers over her finances. However, the Principal can give her Agent as much, or as little, power as she wishes.

Following are some things Agents are usually given the authority to do on behalf of the Principal:

Use the Principal’s assets to pay the Principal’s everyday expenses and the expenses of the Principal’s family
Sue or defend legal proceedings and claims on the Principal’s behalf
Collect benefits from Social Security, Medicare, or other governmental programs for the Principal
Invest the Principal’s money
Buy, sell, maintain, pay taxes and mortgage on real estate and other property for the Principal
Transact with banks and other financial institutions for the Principal
Buy and sell insurance policies and annuities for the Principal
File and pay the Principal’s taxes

Responsibilities Of The Agent

No matter what powers the Principal gives the Agent, the Agent must:

Act in the best interests of the Principal
Keep accurate records
Keep the Principal’s property separate from the Agent’s
Avoid conflicts of interest

Characteristics Of A Good Agent

Selecting an Agent under the durable power of attorney for financial management is an extremely important decision.

The Agent must have:

Capacity: The Agent must have the capacity to execute a contract. The Agent must be an adult
Common Sense in making discretionary and business decisions
Intellectual and emotional fortitude
Willingness to carry out the Principal’s wishes

Learn More At An Initial Consultation

Call Kristof & Kristof, Attorneys at Law, at 626-535-9445, or contact us by email, to learn more about how we can assist in your case.