Empowering a trusted person to make financial and business decisions for you when you become incapable
By Barbara Craig, Attorney at Law
A Financial Power of Attorney (POA) ensures that your appointed representative can make financial and business decisions for you should you become incapable of making such decisions on your own.
Why you need a financial power of attorney
As we age, sometimes we need help managing our financial and business affairs. Or an injury or illness may render you unable to perform routine activities, such as paying your bills or making business decisions.
Who would you put in charge of your financial affairs should you need help? If you have a spouse who is already listed on all of your accounts, it’s a pretty simple decision.
But who would it be if you are not married? Would you want your parents or your children taking care of things? Or would you prefer it was your business partner or long-time significant other? The only way to make sure that the right people are in charge of your financial affairs when you need them to be is to put a financial power of attorney in place before you need it.
A financial power of attorney can be designed so it only becomes active when you have been determined to be incapable of making decisions on your own. A financial POA can be used to manage bank accounts, retirement assets, real estate matters, and investment accounts to name a few. Having a financial POA in place can save thousands in court fees and legal expenses. Without a financial power of attorney, your business partners, family members, or loved ones may be left with no choice but to undertake costly and time-consuming conservator and/or guardianship procedures to obtain the right to make financial and business decisions for you.
As with any POA, a financial power of attorney cannot be prepared for someone who is already incapacitated, and the POA becomes ineffective when a person is deceased.
Estate planning and the financial power of attorney
Financial POA’s are used in conjunction with other estate planning documents to make sure that all of your assets are protected, probate and conservatorship is avoided, and your wishes are respected. Typical estate planning documents include:
- Last Will and Testament or Pour-Over Will
- Living Trust, or other trust documents as needed
- Health Care Power of Attorney
- Advance Health Care Directive
The financial power of attorney document must comply with specific legal requirements to be valid. These requirements are included in the State of California Probate Code Section 4701. To ensure that a financial POA is in compliance with all of these requirements, seek the advice of an experienced estate planning attorney. This is particularly critical, as it is usually too late to revise a POA which has been ruled invalid by a court of law, as the person to whom it applies is typically already incapacitated and cannot consent to the necessary changes.
If you are interested in making sure that a person you trust is empowered to make business and financial decisions for you in the event you become unable to do so yourself, contact experienced estate planning attorney Barbara Craig to discuss a financial power of attorney.
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