Many Americans spend a lot of time and effort managing their finances. While most are worried about how the coronavirus (COVID-19) will impact their income—whether that’s because they are temporarily furloughed, find themselves suddenly without a job, or watching their investment and retirement accounts dwindle—there is another way COVID-19 can wreak havoc on American’s finances: lack of incapacity planning.
As the coronavirus continues to expand across the country, thousands of Americans are unable to carry out normal financial responsibilities because they are too ill, or they are stuck abroad and unable to travel home, or from a lack of resources due to being isolated at home.
While feeling healthy, individuals should plan ahead now and ensure that someone will take care of their financial duties by setting up a Financial Power of Attorney. This important legal document will not only protect your finances should you fall ill from COVID-19 but also from any events that might leave you incapacitated, like an injury or accident.
A Financial Power of Attorney (POA) allows you to select a trusted family member or friend who will be responsible for managing your money and other property if you become mentally incapacitated (unable to make your own decisions) due to illness or injury. Without this document, bills won’t get paid, tax returns won’t be filed, bank and investment accounts held in your name will become inaccessible, retirement distributions can’t be requested, and property can’t be bought, sold, or managed.
If you get sick and are unable to make or communicate your financial decisions and don’t have an updated POA in place, a judge can appoint someone to take control of your assets and make all personal and medical decisions for you through a court-supervised guardianship or conservatorship.
Why would a court do that?—You may ask. As an adult, no one is automatically able to act for you, you must legally appoint them through the use of a POA. Without it, you and your loved ones could lose valuable time, money, and control.
WORD OF CAUTION: Don’t think you’re protected just because your assets are held jointly with your spouse, child, or family member. Here are three reasons why you shouldn’t rely on joint ownership:
Only a comprehensive incapacity plan will protect you and your assets from a court-supervised guardianship or conservatorship and the misdeeds of your joint owners. Do not rely on joint ownership as your plan—it’s simply too risky and unreliable.
A POA can become “obsolete” in as short as one year. This is because many institutions don’t want to rely on stale, outdated documents. Depending on your circumstances, a stale, obsolete power of attorney may not be able to help you and your family with insurance contracts, retirement plans, banking and investment accounts, online personal accounts such as email, Facebook, Instagram and LinkedIn, and elder care and special needs planning.
Minnesota also updated their short form POA only a few years ago.
If it’s been more than a year or two since you’ve signed your power of attorney, it might be time for a fresh one. Call us! We can help make sure you and your family are fully protected by helping you determine:
Regardless of your priorities, there is a financial power of attorney right for your situation and goals. Determine your specific needs while you are of sound mind. Of course, nothing tops the advice and recommendations of an attorney experienced in these matters. So if you are wavering between your options, give us a call.
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