Death Prep 101: Power of Attorney | brokeGIRLrich
Continuing on with our Death Prep Series (that’s what I’m calling it now), here is an introduction to powers of attorney.
If you’re not a big fan of law shows, exactly what a power of attorney is may be a little murky to you.
Power of attorney is a document granting one person to make decisions on behalf of another. This can be used for something small like a forgetful elderly parent deciding to create a power of attorney for their child so their kid can sign checks and keep tabs on their bills for them to major, life or death medical decisions, etc.
A power of attorney essentially says Person A, while of sound mind, agreed that Person B may act on their behalf in all public and private affairs. Person B then becomes Attorney-in-Fact (smooth title, eh?).
For a power of attorney to be valid, Person A must remain of sound mind. If they become incapacitated because of illness or accident, the power of attorney is no longer valid. In the event that Person A has an illness that they are aware will lead to mental incapacitation, they can opt for a durable power of attorney, which is essentially the same thing but still allows Person B to act on Person A’s behalf once the illness progresses.
So, for the Person A’s out there now wondering, do I need a power of attorney? The answer is… maybe. Probably couldn’t hurt (how’s that for commitment?).
Having a standing power of attorney means that if a crazy bag lady loses her mind and shoves me in front of the 1 train on my way home from work tonight and for some horrible reason I live, and I have named my brother in my power of attorney, he will be able to write checks out of my bank account to pay my rent, arrange credit card payments and take care of anything else that I can’t do while I’m in my crazy bag lady induced coma.
Although my brother is not super responsible. Upon rethinking this, I’m putting my mom on my imaginary power of attorney.
If you’re married, having a power of attorney is still pretty important because while you don’t really need to worry about things like paying bills out of joint bank accounts, let’s say a really crazy bag lady beats your husband within an inch of his life with a rusty shopping cart and then pushes him in front of the 1 train.
He’s in a coma for 6 years. You may need to sell your house or some stocks or something to fund the super expensive costs of long term health care (clearly, you really should’ve read my post last week), but most sales like that require both spouses signatures. So you’re now stuck with a coma husband, a far too expensive house and, who knows? 6 years from now might be the burst of another housing bubble.
I’m painting such a rosy future here.
But a power of attorney would save you that fate. A year in, you could’ve easily downgraded to an apartment across the street from the long term care facility, whose insurance payments you never lapsed on now that you’re not paying that crazy mortgage. ;o)
If you’re like me and you have watched too many law shows, you might think, what if I name someone there and they just try to take over my life even when I’m totally fine and we become the next episode of Criminal Minds?
In your power of attorney you can state the exact circumstances under which the power of attorney takes effect. Usually it’s certain medical conditions and for the power of attorney to be valid, those conditions would need to be confirmed by a doctor.
Now let’s say your Person B and you’re all – my idiot little brother has named me in his power of attorney. What do I have to do?
Ok, if you’re young enough to still refer to your sibling as your idiot little brother, you probably don’t have to do anything… other than make lots of inappropriate jokes about how you get to decide when to pull the plug now. Be sure to do this in front of your mother.
However, if your sibling is actually sick and you wish desperately you could just be making pull the plug jokes… you need to talk to them while they are still functional about where their bank accounts are held and get things like log in information and PINs.
Before paying a bill or signing a check for Person A, submit a copy of the power of attorney to the company. It doesn’t hurt to call them and let them know the situation – each company will then supply you with the information about how to get them a copy of the power of attorney.
Always indicate that you are signing something as Attorney-in-Fact, so to sign a check you would write something like Person A, signed by Person B Attorney-in-Fact. If you don’t mention that, you could be held liable for whatever is owed.
What can’t you do? Sign anything that says Person A has knowledge of an event (ie witnessed a crime). Create or alter an existing will. Vote for them.
Do any of you have a power of attorney? Have any of you ever been attacked by a bag lady?
For more posts in the Death Prep series, check out:
- A Look at Long Term Care Insurance
- How Hospice Works
- Should You DIY Your Will?
- Green Funeral Products: What Are They?
- Green Funeral Homes: What Are They?
- Green Cemeteries: Where Are They?
I think people create wills and believe that they are “covered” from a power of attorney perspective because they have an executor of their will. The important thing to remember is that the executor is only active once you die, while you are living, you need a power of attorney. You can easily create one for free online and just get it notarized. It is not a difficult task, but I think it’s an important one.
I’m going to meet you at FinCon someday and I’ll be like “Ooooooh, you’re the death girl!” 😀
Just kidding. This stuff is really useful. I drove 100 miles today. I could have died at any moment. :/
And my brother is super responsible, either.
Will recently posted…Opening a CRAP Fund Will Keep You from Driving so Dang Much
Haha, I never really set out to be the death girl, but some dude walks up to me and addresses me as that next year, I’ll be like “hi, Will.”
My dad is my power of attorney. When I started going on these long tours out of the country we decided it would be good to put that in place not only for the risk of me dying, but if anything needed to be done in my name while I’m away.
Stefanie @ The Broke and Beautiful Life recently posted…In Pursuit of Millionaires: Secrets to Success
That’s a totally legit point. I never really thought of how helpful that could’ve been while I was at sea. My mom may or may not have just forged my signature on the occasional time sensitive thing that came through while I was away.
I am the power of attorney for my mom and it’s really a decision you need to make carefully with regard to who the person will be. That’s what DH and I have not yet done, the power of attorney documents, so thanks for the reminder!
Kassandra @ More Than Just Money recently posted…A Ground Stop Reminder
Really great series and information, Mel! What is the actual process of assigning someone power of attorney? Do you have to go to a lawyer for it? Or just get something notarized? Would it be better to go to a lawyer to do this and a will at the same time?
You made a good point on twitter earlier, that I just want to mention here too, that having a legal power of attorney is also good if you don’t want someone to be your assumed power of attorney; like a family member you’re not on good terms with.
Leslie Beslie recently posted…Rent Stabilization in NYC
That’s true. If you’re likely next of kin is not who you’d want calling the shots for you, you should definitely get on it and assign a new power of attorney. Honestly, it’s very easy to DIY – just like a will. I believe you only need to have it notarized for it to become a legal document… but I need to double check that.
Hahaha I like the crazy bug lady villain! I did make a PoA with my mother some years ago, but from other reasons. I have been living abroad for a while and it comes handy that she can act as my representative back in my home country.
Stefanie pointed that out earlier too for when she used to tour a lot. Honestly, if I’d been a lot more financially savvy, I would’ve as well when I worked for the cruise line. As it is, I was lucky we never needed it.
I think we have power of attorney documents as part of our will, but we really do need to update that, so should look into this at the same time.
debs @ debt debs recently posted…Frugal FinCon Fiesta – Ask me Anything
Haha, the crazy bag lady thing could TOTALLY happen! I have to say, this can be a rather dry topic, but you made it easy to understand AND fun! Thank you so much. I actually have no idea if my parents have a power of attorney (but I hope they do, and maybe I should ask them) and I KNOW I don’t have one. I’m going to have to get one!
Melissa @ Sunburnt Saver recently posted…Frugal FinCon Fiesta y mas!
Thanks! And yeah, they’re really easy to set up!
I used the Power of Attorney to file a claim for the death of my father seven years ago. Since my mother had really a difficult time to accept the truth and she was not ready to file the claims, so I decided to represent for her.
Kate @ Money Propeller recently posted…Jet Setter Interview – Sherry of Save. Spend. Splurge.
Ugh, I’m sorry, Kate. But I’m glad you were able to use the Power of Attorney to get what you needed done.
Great post! This is SO important. I really need to get on it. I’m going to share on my social media!
Thanks!
Whenever you are signing or paying for something there always needs to be some sort of verification. When I was younger and working at a call center this was also the case. You need to confirm that you are who you say you are doing what you say you are doing. That is definitely true for attorneys acting in behalf of their clients.
It can definitely be a difficult decision to determine what the best way to approach this kind of thing is. I know that I would personally want to do everything within my power to ensure that all of my best interests are being kept in mind, and that I’m getting to make the decisions. Those can be very important factors to any of these things, and I hope that people realize that.
A power of attorney lets you appoint someone else for a specific reason. In fact, most of the time powers of attorney are used in case you become disabled in some way or if you get sick and need somebody to handle your financial affairs for you. And it is very simple to create a power of attorney. Thanks for such a nice post, its really informational:-)
This is an important topic many need to give serious thought to. Life happens fast, and it is always best to be prepared.