A Colorado financial power of attorney gives a person the ability to manage someone else’s finances if they become incapacitated. Incapacitation is when a person is unable to communicate or understand. Not to be confused with a medical power of attorney, this document concerns an individual’s finances.
How It Works
The maker of the document is the principal. The principal designates an agent to manager her finances, in case she becomes incapacitated.
If the principal becomes incapacitated the agent will pay the bills, make deposits, handle insurance claims and paperwork, manage real estate and investments for the principal. The principal can expand or shrink the agent’s ability to handle her finances, as desired.
A financial power of attorney ensures the finances of the principal remain intact during incapacitation. Financial powers of attorney are a cost saving security measure on an individuals financial well being.
Durable Or Springing
A power of attorney can be durable or springing. A durable power of attorney takes effect the moment it is signed. A clause must be included stating it will remain in effect even if the signer is incapacitated.
The second instance that a power of attorney goes into effect is when the signer becomes incapacitated. This is known as a springing power of attorney since it remains dormant and then “springs into action” when the signer becomes incapacitated.
Choose A Person You Trust
It is so important to make absolutely sure the person who you appoint as your agent is someone who you absolutely trust with all of your money. Additionally, the financial power of attorney doesn’t take away of your rights. It only allows another person to act in concert with you regarding your finances.
Most people at first glance would prefer the springing power of attorney. There are several reasons why the durable power of attorney is the better option of the two.
Some people are reluctant to entrust another person to gain access to all of their finances. The delay in the effective date of your power of attorney however, does not negate the un-trustworthiness of your attorney-in-fact. Rather it delays your ability to discover and resolve the matter while you have the mental capacity to do so. If you don’t trust the person while you’re thinking clearly, you should rethink who you appoint as your agent.
A second reason why the springing power of attorney is inferior occurs when a determination of incapacity is required in an instance when time is of the essence. This can occur during a medical emergency when crucial decisions must be made over a short amount of time.
Another instance is when an individual’s mental capacity becomes diminished over time, if the power of attorney is durable, the attorney-in-fact can step in and handle the finances of the principle long before the conditions in the springing power of attorney are officially met.
Additionally, a durable power of attorney is a better option for those who travel and can’t conduct business. Your agent will be able to handle your affairs in your absence.
Lastly, a problem with a springing power of attorney happens when someone becomes incapacitated, and then recovers. A question then becomes, does the agent still have authority? This may be an issue that the courts decide.
Must Be Notarized
Once you have your signed and notarized financial power of attorney you should give the original to your agent, and keep a copy for yourself. You should also provide banks, health care providers, and family members with a copy of the power of attorney.
If the person you appoint as your agent can not act as your attorney-in-fact, it is wise to always appoint a successor agent. I recommend the appointment of two successor agents.
Your agent is required to keep a detailed accounting of all transactions they have entered into on your behalf. If you suspect your agent is abusing his or her powers you have the right to an accounting of your assets.
You also have the right to revoke your agent.
A financial power of attorney can be revoked by you at any time simply by sending your agent a letter. From the moment they receive the letter they can no longer act as your agent. Also let the banks, health care providers, and family members know that the revoked your agent as well.
It is possible to have co-agents named in your financial power of attorney. This is not recommended however, since a circumstance may arise in which the co-agents do not agree. The courts will then have to step in to decide the necessary course of action. It’s better to have one person be the decision maker.
Lastly, the agent may be compensated.
Avoids a Conservatorship
If you don’t have a financial power of attorney and become incapacitated, a conservatorship may be required. This can be costly and time consuming. Additionally, the court may appoint someone who you would never consider as someone to be your agent.
It is best to handle your own affairs and leave the courts out of it.
All in all, a durable financial power of attorney, along with a medical durable power of attorney are two documents, necessary estate plan documents.
If you have any questions about your estate plan, please feel free to me at (303) 900-2529 or use my contact page.
This article is for informational purposes only and does not constitute legal advice about your case or situation. There may be exceptions to the information outlined above. Please consult an attorney if you have specific questions about your estate or a decedent’s estate.Follow me on social media: