How do I exercise a power of attorney?
February 24, 2014
Q: My father has suffered a debilitating stroke. I have a power of attorney which allows me to handle his affairs, but is there anything I need to do to activate it, such as get a note from his doctor certifying that he is incapacitated?
A: "Power of attorney" is a fairly general term that can be applied in a number of different ways. You need to check the wording of the document to see how it is meant to be applied. The key phrase you are looking for is "durable power of attorney." Most powers of attorney cease to be valid if the person granting the power becomes incapacitated, but a durable power of attorney continues on in that case. You should also check any state law restrictions in your father's state of residence.
In most cases though, if you have a valid durable power of attorney, you should not need further documentation to begin exercising the authority it gives you.
Ideally, when you receive a durable power of attorney to look after someone's affairs in the event he or she is incapacitated, there are a number of things you should do while they still have the ability to discuss financial matters with you. Still, even if you have not taken these steps in advance, there are things you can do to make up for lost time.
In the ideal case, the person would give you a list of the following:
- All assets, including recent balances and account numbers, for savings accounts, checking accounts, investment portfolios, mutual funds and retirement accounts. This kind of list can involve putting a great deal of sensitive information in one place, so make sure you keep it in a secure location.
- All income sources, such as Social Security, pensions and VA benefits.
- All regular bills, such as rent and utility payments.
If the person becomes incapacitated before you have a chance to compile this information, the two keys to getting caught up are to look through checking account transactions and monitor incoming mail. That should give you a sense of what regular inflows and outflows of money the person has had, and what obligations need to be met.
Once you are caught up on what the financial situation has been so far, you will have to use your judgement when deciding how to adjust for the way circumstances have changed now that the person is incapacitated. After all, that judgement is why your father chose you to have power of attorney in the first place.
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