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Do You Need a Financial Power of Attorney?
If You Think You Don't Need a Durable Power of Attorney
You may not think that you need a durable power of attorney for finances if you're married or if you've put most of your property into a living trust or you hold it in joint tenancy. But the truth is that in all of these situations, a durable power of attorney can make life much easier for your family if you become incapacitated.
If You Are Married
If you are married, your spouse does have some authority over property you own together -- for example, to pay bills from a joint bank account or sell stock in a joint brokerage account. There are significant limits, however, on your spouse's right to sell property owned by both of you. For example, in most states, both spouses must agree to the sale of co-owned real estate or cars. Because an incapacitated spouse can't consent to such a sale, the other spouse's hands are tied.
When it comes to property that belongs only to you, your spouse has no legal authority without a durable power of attorney.
Example: New York residents Michael and Carrie have been married for 47 years. Their major assets are a home and stock. The home is owned in both their names as joint tenants. The stock was bought only in Michael's name, and the couple has never transferred it into shared ownership. Michael becomes incapacitated and requires expensive medical treatment. Legally, Carrie cannot sell the stock to pay for medical costs.
If You Have a Living Trust
A living trust isn't a complete substitute for a durable power of attorney for finances, but it can be helpful if you become incapable of taking care of your financial affairs. That's because the person who will distribute trust property after your death (called the successor trustee) also, in most cases, has authority to take over management of the trust property if you become incapacitated.
However, the successor trustee has no authority over property not held in the trust. Few people transfer all their property to a living trust; most transfer only assets that are expensive to probate, such as real estate and valuable securities. A durable power of attorney ensures that someone will be on hand to take care of other property, as well as day-to-day financial tasks.
FAQs
- How can I find a lawyer to help me plan my estate and write any necessary documents?
- Why should I go to the trouble of planning my estate and writing a will?
- Why can't I just use a book, or one of those computerized "will kits" I've seen in bookstores and do it myself?
- Isn't a will all I need?
- If I use a lawyer, how much should I expect to pay?
Estate Planning Resources
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