A financial power of attorney is a signed and notarized document where a person, known as the principal, gives another person, known as the agent, authority to act on his or her behalf. More often than not, an agent has general authority, which is the broad power to act. However, an agent may also have very limited authority, which is the power to do only very specific things. In most cases, a general power of attorney is durable, meaning that it remains in full force and effect even upon incapacity of the principal. The principal can make the power of attorney effective either immediately or upon incapacity.
Obviously, if you cannot manage your own financial affairs, someone must do so for you. If you do not have a durable power of attorney for finances and you become incapacitated, then it may be necessary for your loved ones to petition the court to appoint a guardian of the estate or a conservator for you. Guardianship and conservatorship proceedings are public in nature, generally time consuming, and they tend to be expensive. In any event, a properly drafted and executed general durable power of attorney can avoid the need for time consuming and expensive guardianship or conservatorship proceedings.
Many individuals incorrectly assume that a general durable power of attorney is not necessary because they hold their property jointly with others or because they do not have much money. However, a general durable power of attorney for finances may be needed for a variety of things. For example, your loved ones may need legal authority to apply for public benefits (such as Medicaid), access retirement accounts, file insurance claims, sign tax forms, sell real estate, hire people to act on your behalf, or contract for health care services.
Finally, it is important to note that a very good general durable power of attorney for finances is an essential tool to nursing home and Medicaid planning. Generally, basic or statutory general durable powers of attorney for finances are insufficient for nursing home and Medicaid planning options. Therefore, if you ever desire to keep any nursing home and Medicaid planning options available to you in the future, a very good general durable power of attorney for finances with a number of important provisions is absolutely essential. If you would like to discuss financial powers of attorney with our office, please contact Sturgul & Long to schedule a consultation today.