The Basics
A financial Power of Attorney is a legal document in which you appoint someone, called an Agent, to manage your financial affairs. A Power of Attorney authorizes your Agent to step into your financial shoes, and act on your behalf and for your benefit.
A financial Power of Attorney is helpful if you are alive, but unable to manage paying your bills, balancing your checkbook, or understanding your finances. The typical tasks that an Agent exercises under a Power of Attorney includes signing checks on your behalf (such as to pay utility, rent, or mortgage bills), communicating with your bank, selling property if you need money to provide for your care, and to file taxes.
If you are unable to manage your financial affairs, and don’t have a financial Power of Attorney, your loved ones may have to hire an attorney and go through the expensive process of having a court appoint a conservator to help you. This process can be painful and expensive for your loved ones.
Durable vs. Springing Financial Power of Attorney
A Springing Power of Attorney only allows your Agent to act on your behalf when you are incapacitated. It “springs” into action, so to speak, when it is needed. Unless you are incapacitated, your Agent cannot step into your shoes legally.
A Durable Power of Attorney allows your Agent to act on your behalf for your convenience immediately after signing the document, not just when you are incapacitated. A Durable Power of Attorney avoids requirement of having a doctor determine whether you are incapacitated before the Agent can act, which can be helpful in emergencies.
A common concern with a Power of Attorney is that your Agent may be tempted to abuse their authority, and use it at times or in ways you do not want or need. The risk of fraud or abuse is even greater at the time you are incapacitated because you are unable to protect yourself. Thus, it is very important that your Agent is someone that you trust and who will act in your best interest.
Need Help?
If you are interested in drafting a Financial Power of Attorney, contact the attorneys at The Commons Law Center by calling (503) 850-0811 or by emailing hello@thecommonslawcenter.org. We can help you take the steps you need to protect your future.