Set Up Power of Attorney for Finances

5 Steps to Set Up Power of Attorney for Finances
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Through a power of attorney, an individual appoints a person, usually a close relative, either to help him manage his affairs, or to handle all his affairs if he's unable to do it himself. When setting up a power of attorney for finances, here's what you and the person in your care should consider:

  1. Determine whether he needs a power of attorney.

    A power of attorney can be used to help someone manage daily financial affairs, to take care of specific financial transactions, to handle financial affairs while he's out of state or out of the country, or to temporarily handle matters while he's undergoing medical treatment. Perhaps more important is the fact that, whether or not the person presently needs help managing his financial affairs, a "durable" power of attorney provides someone to act on his behalf if he becomes incapacitated. Without a durable power of attorney or another financial arrangement, a court may need to appoint someone to act for him if he becomes incapacitated. This court procedure is a cumbersome, time-consuming, and expensive ongoing process, and he may not have input as to who the court will appoint.

    If both a husband and wife are living, each should execute a separate durable power of attorney. For an explanation of how different types of power of attorney address different needs, see What Is Power of Attorney for Finances?

    In some situations, it may not be necessary to prepare a durable power of attorney. Rather, another form of authority, such as a revocable living trust, can accomplish a similar result, giving another person (the trustee) authority to act. People with large estates may decide that a revocable living trust, with its important tax advantages, may be adequate for their needs. However, for the trust to effectively replace a durable power of attorney, all of their present and future income and assets must be part of the trust. Or they may choose to have both a revocable living trust and a power of attorney for finances.

  2. Determine who will serve as the agent and discuss the job with that person.

    A power-of-attorney agent should not only be someone the person trusts and feels comfortable with but also someone with enough financial savvy to handle his financial affairs. If his finances are complex, the agent should be financially sophisticated. Also, the agent should be someone who has the time to attend to necessary financial duties and is likely to remain committed to doing so if the person becomes incapacitated and remains so for a long time. It's also a good idea if the agent lives nearby, within reasonable driving distance of the person and his property.

    Regardless who becomes the agent, it's also important to consider carefully who is to be the alternate or successor agent. This is the person who would take over the job of agent if the first person named became unwilling or for any reason unable to do the job.

    After the older adult has decided who the agent and successor agents should be, it's time to discuss this responsibility individually with each person he has chosen. He should make it clear to each person what handling the financial affairs would entail, and the person should give a clear commitment to take on the job if and when it becomes necessary.

  3. Use forms as a starting point for drafting a power-of-attorney document, and consult an attorney.

    Even though it's best to consult with an attorney before a power of attorney document is finalized, it's wise to look at power-of-attorney forms and discuss their terms beforehand. This will allow you and the person you're caring for to see different possibilities and discuss them calmly before sitting in the lawyer's office with the hourly billing meter running.

    Many forms that can be used as starting points are available online, such as one from the Internal Revenue Service. Your can also download state-specific samples for the state the person lives in by conducting an online search using the phrase power of attorney for finances forms along with the name of the state. There are also commercial legal form sites that can provide state-specific forms.

    More than a few financial institutions, such as banks and brokerage firms, have -- and even prefer -- their own power-of-attorney forms. These can be used as models. And if the person in your care has regular transactions with such an institution, he may want to execute one of these specific forms in order to smooth the way for the agent. In most states, however, a financial institution is legally required to accept any power-of-attorney form officially provided by or accepted in the state.

    Before finalizing a power-of-attorney document, it's a good idea for to consult an attorney. You can check with the attorney about what form of authority best suits your parent or relative's needs and what limits, if any, should be placed on the power of attorney. He can also describe the chosen agent to the attorney, and even have the agent meet the attorney, to get the attorney's opinion about his choice of agent.

    If he doesn't already have or know of an attorney who prepares powers of attorney, he can seek a referral from a different lawyer he knows, or from trusted friends or associates. He can also contact the local or state bar association where he lives; these groups have information about local lawyers' specialties and can make a referral to a lawyer near his home.

  4. Put the power-of-attorney document in writing, store it safely, and give it to the right people.

    A power of attorney must be in writing, regardless of what form is used. No matter how often an older adult has told people what he wants done and by whom, a power of attorney must be reduced to a written document and properly signed, witnessed, and notarized. However, the document usually doesn't need to be filed with the federal or state government unless it's related to taxes. If the power of attorney is to be used in connection with a piece of real estate, some states require that the document be filed at the local county recorder's office.

    The person in your care should keep the original power of attorney document in a safe place and give copies to the agent and successor agents (along with information about the location of the original) and to family members and appropriate institutions such as his bank, brokerage firm, lawyer, and accountant. The document can include language stating that a copy can be accepted as the original. In some states, an attorney or a notary public needs to certify that a copy is a valid representation of the original.

  5. Continue to assess the power of attorney.

    As a person ages or as his financial, personal, or medical situation changes, he should evaluate whether the existing power of attorney continues to be appropriate, and whether the agent he originally chose is still the right person for the job. He can change or revoke the document, including changing the agent, at any time. (You or he can go to to find a sample document that revokes a power of attorney.) If he changes anything, it's always a good idea to prepare an entirely new document, rather than simply marking up the existing one.

Joseph L. Matthews

Joseph Matthews is an attorney and the author of numerous books, including Social Security, Medicare, and Government Pensions, Long-Term Care: How to Plan and Pay for It; How to Win Your Personal Injury Claim; and The Lawyer Who Blew up His Desk. See full bio

about 1 year, said...

I have durable power of attorney for finance. Can I change service coordinators who provided home care for my totally disabled sister ?

over 1 year, said...

my partner is in the hospital dying.Can i get power of POA over his finances.? i already make all the decisions on his health care. we also have jount accounts at the bank.

over 2 years, said...

What do I do about getting a POA for a parent who is in anvanced stage of allzheimers and can't make decisions?

almost 5 years, said...

I do have a reverse situation: I am divorced for some 40+ years, and my ex-wife, although married now (I am still single) is trying to use my only son to force himself to get the power of attorney and to sell my house, car and any other thing I have and give to his mother. My ex-wife and mother of my son has gone even further: she sued her present husband to strip him of half of their current home (she succeeded) and to strip her second son by marriage to strip him from everything she stripped her current husband from. In addition, she arranged to kick-out of any inheritance for my current daughter-in-law in case of a divorce. I am now 67 years old, I am healthy and working and practicing actively sports. My ex wife is older that me, and yet, she claims that in my approaching age, I must give her, or my son the power of attorney: her message is sell your house (it is paid for) and your car (paid for) and give me the monies, while she is not providing a place for me to live. My house is worth a lot, and I mean a lot! Can she forces me to give her a power of attorney, and make me loose my house, because some 40 years ago I divorced her and I have not kept even a contact with her for these past years?

almost 5 years, said...

My son has moved to Australia for work and has given me lasting power of attorney now he wants me to get a mortgage and buy a house for him can I do that with the LPA

about 5 years, said...

Do you recommend a co-power of attorney? My mother has a will and a durable POA. I would like to change it by becoming co-POA with my sister. My sister claims there can be no changes since she moved to have my mother declared incapacitated. Secondly, my brother has a serious illness. He is listed as the next POA should my sister not want or cannot be POA. I think we need to change this too. Thank you. R. Romero

almost 6 years, said...

I am 80yrs old. I am in process developing my own "Case Managment Plan" I like what I have ben reading on ""

over 6 years, said...

knowing th difference in power of attorney n trust one ever explains th necessities of this value..

almost 7 years, said...

Hello anonymous, Thank you for your question. Here is an Ask & Answer page that you may find useful: ( ). Take care -- Emily | Community Manager

almost 7 years, said...

Can a "power of attorney" be done without the authority of my elderly father who has Advanced Alzheimers and is in a care facility. I assisted in obtaining a mortgage for my parent's home back in 1987 (their names remain on the deeds) whilst they were claiming benefit, however, am wondering do I have any say, or power to help my mother if she wants to downsize her property. Please advise. Regards Kam

over 7 years, said...

My mom is in a nursing home, she has dementia and mentally is living in the past. She is 98 years old and up until 3 years ago lived with me. I make all decisions regarding healthcare but we never did anything financially. We have a joint bank account with minimal amount of mone in it, less than $1000.00 and she has a life insurance policy and I am beneficiary. I am her only child and my Dad is deceased. What if anything do I have to do.

over 7 years, said...

Appreciated the step-by-step approach of this article. The focus on basic information helped me understand the what and why of the POA and the limitations. We put a durable POA in place with Mom, she rescinded it at the bank, and then we got her to redo it at the bank and have had no further problems. She is still touchy about how much I talk about her finances but I know what is going on and the bank personnel call me as needed. I have also had to deal with insurance companies and doctors' offices and the DPOA has been critical. Used as referenced in the article for the document and had my attorney review it; he was impressed and said, "use it as is."

over 7 years, said...

super helpful! The legal advice I have been looking for is here, large print so I can see it, and clear writing, so I can digest it. My father in law has left a tangle of debt and this website has helped me to face it.

over 7 years, said...

My dad had a stroke in January 2009 and I had to take a leave of absense from work to go to the US VI to get my dad from the hospital, bring him back to NC with me and took him to the doctof often to get him back to health. Meaning, getting his bad decaded receeding teeth pulled, dentures, rehab for the stroke, prostate check, colonoscopy, medications for diabetes, high colesterol, and high blood pressure, eyes check, etc. I also had his house painted by a friend while we were in the states, refrigerator repaired, and made sure the grass was cut while he was with me . I have been paying his bills since 2001, when he had his first stroke. The second one was worst than the first one. He began to get better so I took him hom in April 2010 to see how he would do and now he has completely disowned me toold me I was using himi and had a credit card in his name he does not know anything about (provoted by his cousin that did not see about him when he was ill but now trying to turn him against me). While he was here I had wheels on meals bring him lunch and I cooked dinner, also put my son out of his room so my dad would have a bed to lay in while my son slept on the couch for 1 1/2 years. In the meantime I was in a process of going through a seperation. Took him him, brought him knew furniture because the old one had bed bugs and when the furniture removed it, it fell apart anyway. Now all of a sudden I am stealing from him. He wrote me a letter that is really not in him but cohearsed by my cousin that he is going to sue me for a GE Money credit care he claims he knows nothing about. It was a financial plan to pay for the 13 teeth that were rmoved from his mouth because they were rotten and decaying and the doctor stated this which may have caused his stroke. Upper and lower dentures were put in. He had to sign it because I have a family and paying my own bills and he received two checks that could pay for it and it was not going to be any interest for 6 months. Since he has been back to the US VI, his cousin has told him that I all about money but I have never taken anything from my day but took complete care of him..I have plenty of witnesseses. What can I do to get him evaluated and prove that he is being brain washed by her because she has already took everything from her brother. She sold a house while he was the one taking care of it. I am afraid she will do the same thing to my day once she convinces him to sign everything over to her. My dad has never in his entire life done this to me until he go back down there in my 43 years of life. Do I have any legal rights against her since I am his first born and only heir that has taken care of him. Please respond ASAP because I need answers. We also had a trust that I found out he has take me off because of his cousin also. Shouldn't the lawyer that drew up the trust be able to have him evaluated? Distraught Daughter