In my last blog we discussed the importance of having a medical power of attorney. This blog will focus on durable general powers of attorney, sometimes referred to as financial powers of attorney. A durable general power of attorney nominates a person to act as their agent. This person will be responsible for making financial decisions on your behalf such as paying your bills, negotiating settlements, buying and selling assets. You are able to make the power of attorney effective the day you are deemed unable to handle your finances by your physician, frequently referred to as a springing power, or the day you execute the power of attorney.
There are pros and cons on deciding whether or not to make a power of attorney effective immediately. In emergency situations, it could be difficult for an agent to obtain the necessary documents from your physician to satisfy banking regulations. However, it is not uncommon for individuals to want to keep their financial information confidential.
You should select a person you trust and know is financially responsible, whether that be one or more of your children or a neutral third-party. There have been cases in which a parent chooses a third-party in order to minimize friction among family members. It may also be beneficial to discuss with your children the reasons why you have nominated a specific person to serve as your agent to ease your children’s concerns and avoid future tension.
A person who accepts the nomination should not do so lightly. An agent could face civil and criminal penalties if he or she misuses their power as agent. When a person is nominated as agent, it is always useful to discuss your duties and responsibilities with an attorney. Having a durable general power of attorney while you are still able to make financial decisions alleviates your children from having to decide who should take on the responsibility.
My next blog will talk about when a guardianship and conservatorship is needed.
Laura Morrison Trujillo