Image Licensing Protections: An Introduction

Why A Living Trust Or Marriage Does Not Substitute For A Durable Financial Power Of Attorney

24 November 2014

Judy Alexander

If you think you don't need a durable financial power of attorney, then you should examine your reasons for thinking like that. This is because there are situations that people think can substitute for drafting a power of attorney document, but they do not. Two examples of such situations include:

Having a Living Trust

Just like a financial power of attorney, a living trust gives another person the power to handle your finances if you become incapable of doing so on your own. Most people think that living trusts only come into effect if they die. However, medical incapacitation also allows your power of attorney agent to start managing your financial affair. This is why it is easy to think that a living trust can substitute a durable finance power of attorney.

Unfortunately, many people do not transfer all their properties to their trusts. If this is your situation, then your agent will not have a say in your assets outside the trust. Even if you have a living trust, it is possible that you only use it for valuable assets such as real estate. If you want somebody to oversee your day to day finances, then choose a person and give him or her your power of attorney.

Being Married

Those who are married may also discount the need for power of attorney since their spouses can handle most of their financial issues. For example, your wife or husband can access your joint account and pay school fees for the kids if you are incapacitated. However, most states limit spousal access to valuable assets such as cars or real estate properties.

Consider the case where you are incapacitated in an accident, and your medical bills drain the family account. If your spouse was not a co-owner of your car, then he or she may not be allowed to sell it to pay for the kid's tuition.  It may take a lengthy and costly court process for him or her to be allowed to do so. However, if you had given a trusted person your power of attorney, then the person can easily take care of such matters.

A durable financial power of attorney gives the agent sweeping powers to manage your financial matters. In fact, your agent, such as someone from Dale Darby & Mitzi Sweet Law Office, is only limited by the conditions restrictions you include in the power of attorney document. The agent does not have to be your spouse, but he or she should be somebody you can trust with your money.

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