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A financial power of attorney, more formally known as a durable power of attorney for finances, grants another person or entity the authority to make financial decisions and manage your assets.
Who Needs a Financial Power of Attorney?
Any adult who owns separate property or has separate bank accounts should consider protecting themselves with a durable power of attorney for finances. Even a short period of incapacity can cause serious problems for someone who hasn’t made arrangements.
Imagine, for example, that you’re in a serious car accident and in a coma, or must remain sedated while certain injuries heal. Your mortgage payment and car payment come due, and the money is sitting in your bank account, but no one has the legal authority to transfer those funds. Your parent or sibling or child contacts the lender to try to make arrangements, but the lender is legally prohibited from giving them any information.
Or, the money isn’t in your account, but you have a large check sitting on your kitchen table waiting to be deposited–unsigned, so there’s no way to get the funds into your account.
When the incapacity is short term, this can be inconvenient. Your cable might get disconnected and your cell phone service suspended. Your license plates may expire. Some late fees will add up. If the incapacity persists, the consequences can be much more serious.
What Authority Does the Appointed Agent Have?
A financial power of attorney will typically grant the appointed agent authority to conduct normal business, such as depositing funds to your accounts, paying bills, accessing safe deposit boxes, and selling property. You may also choose to grant certain other powers.
The authority is relatively broad because in the case of a long-term or permanent incapacity, the agent may be required to take significant action. For example, if a person becomes permanently incapacitated and is moved into a long-term care facility, it may be necessary to sell the incapacitated person’s home or other property.
It’s important to choose your agent carefully. Of course, you’ll want to name someone you trust. But, you should also consider the agent’s aptitude for managing your financial affairs, particularly if you have significant assets.
When Does a Durable Power of Attorney for Finances Take Effect?
Under Washington law, a power of attorney takes effect as soon as it is executed, unless the document explicitly contains a triggering event or specific effective date.
Most often, a financial power of attorney in Washington will include a provision that says it takes effect upon incapacity. That means your appointed agent won’t have the authority to take financial actions on your behalf as long as you are capable of making those decisions on your own. Instead, that authority kicks in if you’re incapacitated.
Which type best suits your needs depends on your circumstances. Most people who are fully managing their own affairs prefer that a financial power of attorney take effect if and when they become incapacitated. However, in some circumstances, it may be beneficial to have a power of attorney take effect right away. One common example is when an aging parent grants a power of attorney to an adult child so the child can help manage the parent’s affairs. Another might be a married couple in which one partner is traveling outside the country, or is otherwise expected to be unavailable for a time.
Your estate planning attorney can explain the risks and benefits of each approach and help determine which is most appropriate for your situation.
Talk With an Experienced Washington POA Attorney
An attorney experienced in drafting Washington powers of attorney is your best resource for information and guidance about how a POA can protect your interests, which powers you should grant your agent, and whether it makes sense to have your POA effective immediately or on incapacity.
At Harbor Law Firm, we make estate planning as simple and stress-free as possible. That means:
- Knowledgeable guidance customized to your circumstances and your goals
- A fully remote process that never requires you to leave home
- Early morning, evening, and weekend hours to fit your schedule
- An adaptable process for exchanging documents and collaborating
- Flat-rate pricing that ensures you’ll never be surprised by a legal bill
We also offer free consultations. Schedule yours right now.
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