A will is a critical part of your estate plan, but it is only useful after your death. To protect yourself in the event that you are unable to speak for yourself, you must do more.
If you are incapacitated there are two main areas in which you need someone else to have the right to speak for you: 1) financial matters and 2) medical decisions. My next couple of post will address the first area – financial matters – by explaining how you can allow another to conduct financial matters on your behalf through the use of a Power of Attorney (POA). I will discuss how to handle medical decisions in later posts.
What is a power of attorney?
A POA grants another the authority to act on your behalf as if they were you. The person that you appoint as your agent in the POA essentially stands in your shoes. You may grant your agent the power to handle almost any financial matter on your behalf.
Why do you need a power of attorney?
Without the ability to instruct financial institutions on how to handle your assets and liabilities, you are powerless to control your life. You will not be able to apply for disability or pay your mortgage, health insurance, credit card bills or taxes. And no one else has the automatic right to handle these matters for you unless they either 1) incur the time, expense and hassle of going to court to seek the right to act for you; or 2) are appointed as your agent in a POA.
The Conservatorship Process
A person seeking to handle your financial matters must file a petition with the court asking to be appointed as your conservator. The court will then hold a hearing to determine 1) whether you are incapacitated; and 2) whom should act on your behalf. Simply put – the primary purpose of incapacity planning is to avoid the court controlled conservatorship process.
It can be a lengthy and expensive process – at a stressful and confusing time – for your best friend, or unmarried partner, to obtain judicial approval to handle your financial matters. That friend must go to court and ask for permission to act on your behalf.
Minnesota law provides a priority list for those seeking to act as your conservator. The good news for nontraditional families is that this priority list does include an adult with whom you’ve lived for 6 months prior to filing with the court. The bad news is that this adult is 7th on the priority list – behind a parent or adult child.
Avoiding the Conservatorship Process with a Power of Attorney
The agent you appoint in your POA generally has the immediate right to act on your behalf. And, if someone challenges that right, a court will most likely appoint your agent to handle your matters as the person appointed in a POA is at the top of the above-mentioned priority list – before a parent or adult child.
While a POA is important for nontraditional couples, it can be critical for single parents who do not live with a partner or have another “legal backup” to handle matters on behalf of them or their children.
The court resorts to using the priority list because it has no other way of knowing what you want – unless you put it in writing. In the face of uncertainty, the court will generally err on the conservative side by granting authority to someone related by blood or marriage. So, protect yourself – and your minor children – by executing a valid POA to appoint an agent to handle your financial matters at a time when you will be most vulnerable.