Financial Powers of Attorney

A financial power of attorney is a document that authorizes someone (referred to as your “agent”) to act on your behalf. A financial power of attorney may be limited to a specific term or give your agent the authority to take only a certain specified action on your behalf (such as the power to complete a real estate transaction while you are away on vacation), or it may convey broad authority to your agent to act on your behalf. A financial power of attorney may be “durable” in nature, meaning it is not affected by your subsequent incapacity. It may also be “springing”, meaning it does not take affect until the occurrence of a specified event, such as a determination that you are no longer capable of managing your own financial affairs, or it may be immediately effective upon the signing of the document.

Do you need a financial power of attorney?

Many clients ask why they need a financial power of attorney. They assume that their spouse automatically has the authority to act on their behalf in the event they become incapacitated. However, this simply isn’t the case-your spouse will need to have the authority conveyed under a power of attorney, or be appointed as your conservator, in order to take certain actions on your behalf if you are incapacitated. Other clients assume that if they have a trust, they don’t need a financial power of attorney, since if they become incapacitated, their successor trustee will manage the assets held in the trust. While this is true, there are many actions that the successor trustee is not authorized to take on your behalf if you are incapacitated, such as signing your tax return, dealing with Social Security, Medicare, insurance, etc., and handling assets which are not held in the trust. For this reason, a financial power of attorney is advisable even if you hold all of your assets in your trust.

Who should you name as agent?

Careful consideration should be given to your choice of agent. Financial powers of attorney are important legal documents that can convey important powers to the named agent. You will want to name someone who is capable of managing money, who will make sound financial decisions, and who you trust will have your best interests in mind. Typically, if you have a trust, you will name the successor trustee of your trust as your agent on your financial power of attorney. Consult your estate planning attorney for further guidance on selecting an agent for your financial power of attorney.

Thanks for reading our blog. If you have questions, or need assistance with estate planning, contact the Casiano Law Firm for a complimentary telephone consultation with an experienced San Diego estate planning attorney.