A durable power of attorney for finances, ( “FPOA”) is an uncomplicated way to arrange for someone to manage your finances if you become unable to make decisions for yourself. If you become incapacitated and do not have a durable power of attorney in place, a guardianship court proceeding is probably unavoidable. Therefore, it is recommended that you put a FPOA in place sooner, rather than later, as it may be too late.
The FPOA can be drafted two ways: (1) so that it goes into effect as soon as you sign it, or (2) that it is not in effect until a doctor certifies that you have become incapacitated.
When you create and sign a FPOA, you give another person (your ‘agent’) legal authority to act on your behalf.
It is usual for an agent to be given broad power to handle all finances, however you can limit these powers if you choose to. Typically, the powers include, but are not limited to, dealing with:
- real estate and other property
- government benefits (Social Security/Medicaid)
- bank accounts, investments, stocks, bonds, and mutual funds
- insurance companies and annuities
- Federal/State taxes
- business entities you have an interest in
- retirement accounts.
The agent is required to act in your best interests, keep full and accurate records, and avoid self-dealing and commingling with his/her own assets.
The FPOA automatically ends at your death, and therefore your agent cannot deal with things after your death, such as paying your debts, making funeral/burial arrangements, or transferring property to your heirs.
Your durable power of attorney also ends if:
- You revoke it.
- You get a divorce, unless POA provides otherwise.
- A court invalidates your document.
- No agent is available.