Durable Powers of Attorney And Your Finances

A durable power of attorney for finances allows you to name someone you trust (called your "attorney-in-fact" or "agent") to handle your finances if you become unable to take care of yourself. Every state recognizes this type of document.

As with documents directing medical care, you should seriously consider making a durable power of attorney for finances if you want your partner to manage your money if you can't. If you don't prepare the document and you later become incapacitated, your partner or other family members will have to ask a court for authority over your financial affairs. These proceedings, called "conservatorship proceedings," can be time-consuming and expensive -- and they can be disastrous for unmarried couples if the court names another family member to take over, especially if your finances have been intertwined with those of your partner for a long time.

You can make your financial power of attorney effective immediately or you can specify that it should go into effect only if you become incapacitated; the latter is called a "springing" power of attorney. While some people are more comfortable making a springing document, an immediately effective document holds a potential advantage for unmarried couples in a long-term trusting relationship. If you make your document effective immediately, your partner can handle financial transactions for you at any time, even when you are not incapacitated. This can be useful if you are out of town, under the weather or temporarily unavailable for any other reason.

When you make a durable power of attorney for finances, you can give your partner (or other attorney-in-fact) as much or as little control over your finances as you wish. The powers you grant may include:

• using your assets to pay your bills and everyday expenses
• buying, selling, maintaining, paying taxes on and mortgaging real estate and other property
• collecting benefits from Social Security, Medicare or other government programs or civil or military service
• investing your money in stocks, bonds and mutual funds
• handling transactions with banks and other financial institutions
• buying and selling insurance policies and annuities for you
• filing and paying your taxes
• operating your small business
• claiming property you inherit or are otherwise entitled to
• hiring someone to represent you in court, and
• managing your retirement accounts.

Whatever powers you give your attorney-in-fact, he or she is legally required to act in your best interests.

Like healthcare directives, you can make a durable power of attorney for finances if you are at least 18 years old and of sound mind. And as long as you are of sound mind, you can change or cancel your document at any time.