When you Need help Managing Money
If you live long enough, you will eventually need the help of others to do things that have been easy for you to do your whole life. When this happens, children will often step up and do your bookkeeping. If they are simply entering credit card info on a website to pay your power bill, little preparation is needed.
If your child needs to cash a check from Social Security or manage and move bank funds, this can be more difficult. Third parties like banks and insurers are often wary of children helping their parents manage and spend funds without official legal status to do so. It is not uncommon for children to take their “inheritance” early, without the knowledge or consent of their parent. Financial institutions usually make efforts to prevent this.
This problem is best solved well in advance of age related disabilities. A solid answer to this problem is a Power of Attorney. This document lays out when and how a person you trust can legally manage your assets. A copy of the Power of Attorney can be taken to a bank, or mailed to an insurer to require them to give a child access to their parents funds to care for the parent. Property can be purchased or sold, always to the benefit of the aging parent. This power will last until the Power of Attorney is revoked, or the signer dies.
Other common, but less effective, options include adding a child to a bank account or signing a limited power of attorney for each bill collector or bank that asks for it. A shared bank account must be set up correctly, or a child may get the legal right to keep the money after your death without sharing with siblings or even counting the payment of those funds against any inheritance the child might receive by Will or Trust. Limited power of attorney can be helpful to give someone temporary access, but most of these are designed to expire after a short time. Additionally, if you become fully incapacitated, you will be unable to sign new limited Power of Attorney documents as needed.
What happens if the parent becomes incapacitated before a Power of Attorney has been signed? In this case, the only remaining option is to go to court. Here a Judge can appoint a Conservator to manage the incapacitated persons money and other assets. After court costs and attorney fees, this can easily cost over $1,500 to achieve. Court appointed Conservators have a greater burden than the average person named in a Power of Attorney. Conservators must file regular reports with the court to show they are managing money correctly. If a report is not filed, or the finances are not in order, the Court may revoke the conservator’s appointment.
A Power of Attorney can be designed to start immediately, or at a time in the future. Most are set to begin when the signer becomes incapacitated.
Clearly, the longer you wait to sign a Power of Attorney, the greater chance you will add challenges to those who care for you in your old age. An easy answer to this problem is to create your estate plan now, and make adjustments as needed while you age. Here at Prigmore Law, we have the experience needed to prepare for your future without any pain in the present. Give us a call today to make an appointment and discuss your options. Your friends and family will thank you later!