Signing a durable power of attorney for finances is a good idea if you believe health problems may prevent you from handling your financial matters at some point. Of course, it is possible for anyone to become incapacitated at any time. A durable power of attorney for finances ensures that someone you trust, your attorney-in-fact, will have legal authority to act for you if you do become incapacitated.

Even if you are married, a durable power of attorney for finances usually makes matters easier for your family. For example, generally, both spouses must agree to the sale of jointly owned real estate. Because an incapacitated spouse cannot consent to selling the real estate, instituting a guardianship proceeding is often necessary.

In a guardianship proceeding, your spouse or other person petitions a court for authority over some or all of your financial affairs. This can be embarrassing because the petitioner must show the court that you cannot handle the matters yourself anymore. The person appointed is usually called a conservator or guardian of the estate. Frequently, significant attorney's fees are incurred and the petitioner must usually post a bond, prepare and file reports, and obtain court approval for many transactions, including selling real estate.

In some situations a guardianship proceeding may be appropriate. If you give a durable power of attorney for finances to an individual who steals or mismanages your property, recovering the funds is extremely difficult, as there is no formal supervision. Therefore, if there is no one you trust enough to appoint as your attorney-in-fact, a guardianship, with its court supervision, is often worth the extra hassle and cost.

A durable power of attorney for finances does not allow your attorney-in-fact to make medical decisions for you. You can, however, sign a durable power of attorney for healthcare, which allows you to choose someone to make those decisions for you if you become incapacitated. A living will, specifying your preferences concerning certain types of medical treatment and life-prolonging measures, should also be considered.

A durable power of attorney for finances can be drafted so that it takes effect immediately. However, it is generally prudent to specify that it becomes effective when your doctor certifies your incapacity. This springing feature allows you to control your affairs until you become incapacitated. Your durable power of attorney for finances ends when you revoke it, which you can do as long as you remain mentally competent, or automatically upon your death.

As laws vary from state to state, you should consult your attorney if you are interested in establishing a durable power of attorney for finances.

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