Durable Power of Attorney for Finances: Do I need one?

18 Jul Durable Power of Attorney for Finances: Do I need one?

What is a durable power of attorney for finances?

A power of attorney for finances is also sometimes called a “Durable Power of Attorney for Asset Management” or “Durable Power of Attorney for Finances.”  It is a legal document that allows you to give someone the power to act on your behalf, even after you have become incapacitated.

Why do I need a durable power of attorney for finances?

If you become sick or injured and can no longer take care of your own personal finances, then someone naturally has to step in and help you. By creating a durable financial power of attorney, you name a trusted friend or family member to take care of your finances when you are mentally or physically unable to. This person will be able to pay your bills, make deposits, withdraw money, and handle all of your money matters on your behalf. Whether you have a bank account with only $400.00 or an estate worth $2,000,000.00, it is a good idea for almost everyone with property or any income to have a durable financial power of attorney. It’s particularly important if you fear that health problems may make it impossible for you to handle your financial matters.  But, this should not be the only reason, as we all know life is precious and accidents do happen.

For example: You are a single, healthy 27 year old woman who has not gotten around to preparing your estate plan, let alone your durable power of attorney for finances. You think, “I’m young, don’t own property, I just have a small savings account and a CD at the bank ….I don’t think I really need to plan for my death right now.” WRONG. Preparing an estate plan is not just planning for your death, but for incapacity as well.  During a trip to Cabo you sustain severe head trauma when your jet ski flips over leaving you temporarily incapacitated. What next?

If you do not have a Durable Power of Attorney for Finances, no one will have access to your bank accounts or your CD. No one will be able to withdraw the money needed to pay your rent and keep a roof over your head, let alone buy you groceries. And, until your loved ones get a judge to sign off on a court order, you better hope someone is generous enough to pay your bills and keep your lifestyle going. All of this could have been avoided with one simple document that would have cost you what you paid for a dinner and a movie for you and a friend.

What happens if I don’t have a durable power of attorney for finances?

Without this important document, your loved ones will have to go to court and ask a judge to give them authority over your financial affairs. This is called obtaining a “conservatorship” and can be expensive and embarrassing not to mention your loved ones must ask the court to rule that you cannot take care of your own affairs — a public airing of a very private matter.

Who makes financial decisions for me under a California durable power of attorney for finances?

In California, the person you name to make decisions for you is called your “agent.” You can name any competent adult as your agent; the person most definitely doesn’t have to be a lawyer. You should look for 3 qualities in an agent: 1.) honesty, 2.) common sense, and 3.) dependability.  It is also a good idea to choose a person who lives nearby which will make this easier from a practical point of view.

When does my durable power of attorney for finances take effect?

There are two different types of durable powers of attorney for finances you can choose from. The first is called “immediate power of attorney” and will go into effect as soon as you sign it. The second is called “springing power of attorney” and will go into effect when a doctor has certified that you have become incapacitated. The document is called a “durable” power of attorney for finances because it stays effective even after you are incapacitated.

When does my durable power of attorney for finances end?

  1. A durable power of attorney for finances automatically ends at your death.
  2. You may also revoke the durable power of attorney for finances at any time.
  3. The durable power of attorney for finances will also end if a court declares that your document is invalid.
  4. The durable power of attorney for finances will also end if you have no agents available to act as your power of attorney.  This is why we always ask you to name successor agents.
  5. The durable power of attorney for finances will also end if you get a divorced and your spouse is your agent.

A Durable Power of Attorney for Finances is extremely affordable. Please call us at (818) 649-9110 or email us at info@bazikyanlaw.com to obtain a Durable Power of Attorney for Finances. We can have the document in your hands within 24 hours.