Durable Power of Attorney for Finances: An Important Document in Financial and Estate Planning
Currently taking an online estate planning course from Kansas State University, Dr. Rebecca J. Travnichek, Family Financial Education Specialist with University of Missouri Extension, has realized families, including her own family, need to plan for a number of important future concerns. Two issues can be resolved by instituting two legal documents—a durable power of attorney for finances, described below, and a health care proxy or durable power of attorney for health care to be described in the next Financial Success Spotlight.
Pretend you have been in an accident and are lying unconscious in a hospital bed unconscious for almost a week. Your mortgage payment was due the day of the accident. The car payment is due tomorrow. There are several other bills that need to be paid this week. Your checking account is in your name only. What is going to happen to your finances? Well, let’s just say it might not be good.
One solution to this type of problem is to establish a spouse, loved one, or trusted friend as your durable power of attorney for finances. This person or persons can act in your behalf in financial matters—paying your bills—if you are unable to do so yourself. You want to be sure the person or persons you appoint in this role are individuals you trust above all others.
There are other manners in which you can accomplish these means, but they are time consuming and costly. For example, appointing a guardian may take as long as six months to finalize and cost up to $10,000 or more depending upon the situation. Power of attorney forms cost as little as $1. Many states offer free forms on their websites. It must be notarized too, which may cost a few dollars as well.
The word “durable” is important regarding this and the Durable Power of Attorney for Health Care. Durable means that it remains in effect for as long as you live, as long as you do not change it. It does not end if you become incapacitated. At death, your last will and testament becomes the important guiding document.
One last thing to remember about the durable power of attorney for finances document, keep the signed, original document with other important documents in your home, not in your safe deposit box. Most entities will act only upon receipt of the original document, not a copy. Give a copy to the individual or individuals you designate as the powers of attorney, but be sure to tell them where to locate the original if they need too.
For more information on this or any other family or personal finance topic, contact Dr. Rebecca J. Travnichek at University of Missouri Extension-Andrew County (816) 324-3147 or via e-mail at TravnichekR@missouri.edu.
One solution to this type of problem is to establish a spouse, loved one, or trusted friend as your durable power of attorney for finances. This person or persons can act in your behalf in financial matters—paying your bills—if you are unable to do so yourself. You want to be sure the person or persons you appoint in this role are individuals you trust above all others.
There are other manners in which you can accomplish these means, but they are time consuming and costly. For example, appointing a guardian may take as long as six months to finalize and cost up to $10,000 or more depending upon the situation. Power of attorney forms cost as little as $1. Many states offer free forms on their websites. It must be notarized too, which may cost a few dollars as well.
The word “durable” is important regarding this and the Durable Power of Attorney for Health Care. Durable means that it remains in effect for as long as you live, as long as you do not change it. It does not end if you become incapacitated. At death, your last will and testament becomes the important guiding document.
One last thing to remember about the durable power of attorney for finances document, keep the signed, original document with other important documents in your home, not in your safe deposit box. Most entities will act only upon receipt of the original document, not a copy. Give a copy to the individual or individuals you designate as the powers of attorney, but be sure to tell them where to locate the original if they need too.
For more information on this or any other family or personal finance topic, contact Dr. Rebecca J. Travnichek at University of Missouri Extension-Andrew County (816) 324-3147 or via e-mail at TravnichekR@missouri.edu.
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