Friday, February 17, 2012

What is a Power of Attorney for Finance?

A power of attorney for finance is a form that you can complete that states who you want to handle your financial life if you are too sick to do so yourself.  Similar to a power of attorney for health care, it allows you to control who handles the financial matters of your life if you are in a coma, have dementia, are in long-term care, etc..  Upon your death the authority of the power of attorney ends, and the personal representative who take over financial duties.

Image credit: www.sxc.hu - free image

When selecting who to appoint, give thought to what people in your life are good with financial matters, have the time to take over your financial matters, and can function well if you are very ill.  Often times I hear people say "I don't need a POA for finance because I am married" or "because my daughter is listed on my bank account".  In my opinion those statements could not be farther from the truth.

Wisconsin, as are many other states, is not a next-of-kin state.  That means your spouse, partner, adult children, have no automatic authority to make financial decisions for you if you become incapacitated.  And your financial life spans much broader than the few accounts you have at the bank.  It includes, but its not limited to:

  • signing state and federal tax forms;
  • retirement accounts;
  • employer human resource issues; 
  • Social Security Administration;
  • filing a personal injury law suit; and
  • contacting life insurance and other carriers.
Without a POA for finance in place, should you loose capacity, someone from your circle of loved ones will need to go to court and seek guardianship over your financial life.  That will take time, cost thousands of dollars, and add to the stress of an already stressful time.  Taking action now will save money, reduce stress, and allow you to control who acts if you are not able to.

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