A durable power of attorney for finances (DPAF) allows you to appoint someone to manage your finances for you in the event you become incapacitated.
Unfortunately, many people think they do not need a durable power of attorney for finances if they are married or if they have put most of their property into a living trust, or if they hold their property in joint tenancy. However, the fact of the matter is that having a durable power of attorney can make life much easier for your family in the event you become incapacitated.
Do not assume that your spouse will automatically be able to manage your finances if you can't. Although your spouse does have some authority over property you own jointly, there are significant limits on your spouses' right to sell property held in both of your names. As an example, you and your spouse must agree to the sale of co-owned or jointly owned real estate or cars. Since an incapacitated spouse cannot consent to such a sale, your spouses' hands are tied.
And when dealing with property that is held in your name only, your spouse has no legal authority to sell or transfer that property. Having a durable power of attorney will give your spouse the authority to sell your property.
The primary purpose of a living trust is to avoid probate. A living trust can also be useful if you become unable to care for your financial affairs. This is because the individual you choose to distribute your trust property (the successor trustee) can, in most cases, take over management of the trust property if you become incapacitated.
However, a successor trustee has no authority over property that is not held in trust. While most people transferred into their living trust assets that would be expensive to probate, such as real estate or valuable investments, few people hold all of their property and their living trust. So while a living trust is helpful, it is not a complete substitute for a durable power of attorney for finances.
About the Author
State Bar of California, State Bar Number 122692 www.calbar.org