In my last column, I explained the importance of having a health care proxy. You will recall that the proxy allows someone you’ve named to make health care decisions for you when you are unable to make or communicate those yourself.
This week, we’ll discuss the durable power of attorney. With this document, you name someone you trust to manage your personal and financial affairs.
Why would you want a durable power of attorney? Well, let’s start with convenience. If you are on a business trip, a vacation, in the hospital, or for some other reason just can’t make that call to your insurance agent, sign that form required by your pension, or get to the bank, with the durable power of attorney, you’ve authorized someone to act on your behalf.
Then there’s need – if you have an accident or surgery that renders you incapable of managing your affairs, or if you become incompetent (usually linked to age) – you’ve already put someone in place who can tend to your banking and other affairs.
And if you don’t have a durable power of attorney? Things can get ugly. Should you become incapacitated, whether through accident or illness, if you have not executed a durable power of attorney, most likely your family will not be able to access your bank accounts to pay your bills, they won’t be able to work with your retirement funds to increase the monthly withdrawals to pay for care, they won’t be able to protect your assets from the cost of nursing home care – unless they go to court and initiate “conservatorship proceedings.”
A conservatorship involves spending a lot of money, takes a lot of time, requires lawyers, and drains the family emotionally. It’s frustrating to deal with a conservatorship that could have been avoided by simply signing a durable power of attorney back when the family member was able to.
Whom should you name to act on your behalf? Ask yourself, Whom in your life do you trust with access to your finances? Who is good at meeting deadlines and taking care of paperwork?
Unbeknownst to most of us, your spouse does not have automatic legal authority over your affairs. If you want your spouse to manage your financial matters if you can’t, you need to actually name him or her in a durable power of attorney.
For a small investment (usually less than $200, depending on your attorney’s policies), you can give trusted individuals the power to help you take of yourself and you can avoid having potentially thousands of dollars spent on a court proceeding (by the way, all the fees for that proceeding come from your bank account). By spending about one hour of your time, you can leave your attorney’s office knowing you have taken care of yourself and made things much easier for your family.