A Financial Power of Attorney is a legal document that allows you to appoint a helper called an “agent” to manage your finances on your behalf. I think a lot of people take this document for granted, especially when married.
What About My Spouse?
Most people assume that if you are married your spouse can manage your finances if you are in a hospital or nursing home, but that is not the case. If the asset is not jointly held with your spouse, your spouse has no legal authority to access it. For instance, your retirement accounts are not jointly owned. Those accounts are only accessible by you. You may also have separate bank accounts from your spouse. How are we going to access those individually held accounts if you become incapacitated?
And My Children?
This also applies to any adult child in your life. While our instincts say that, as their parent, we should have the authority to help them, legally that is not the case. When we all woke up on our 18th birthday, we became adults and, with this, we became our own decision makers. I’m not saying we were smart enough or mature enough to have this power, but legally, we were now in control of our own decisions. Your adult child probably has their own bank account. They might pay for their own cell phone or car. It isn’t a fun 18th birthday present, but make sure your adult children have Powers of Attorney so that you have the authority to help them in the event of an emergency.
Going to Court
When we don’t have this legal document in place, and a person lacks the capacity to execute a Financial Power of Attorney, a Court will need to get involved. Here in Colorado, we call this court preceding a “conservatorship”. In a conservatorship hearing, the judge determines whether someone needs to be appointed to manage a person’s financial affairs. If the judge finds that a person is unable to manage their own finances, a court order is issued appointing someone to act as their Conservator. Typically, a family member is appointed, but the Court could appoint a professional to act.
The Conservatorship Buzz
Conservatorships are all a buzz right now because of the ongoing legal battle regarding various celebrities and their conservatorships. Not all conservatorships are bad. They can be incredibly helpful for some families. Other times, though, they are excessive and an unnecessary expense. Personally, I like to avoid court proceedings when possible. Get a Financial Power of Attorney in place. It is inexpensive, you avoid an expensive, drawn-out conservatorship court proceeding, and it keeps you in control.
Learn more here about how a Financial Power of Attorney can be a part of your Estate Planning.