Who can make your financial decisions if the unthinkable happens?
COVID-19 has made people propose hypothetical situations to their estate planning attorneys, which they probably never would have asked or thought of, prior to the pandemic. One question I often receive is “What if I am traveling to another state (or country) outside of my home state of Florida, there is a new COVID-19 breakout in that state, and then I am quarantined from returning home; who will take care of my bills and financial obligations back home?”
Given how quickly the coronavirus and related complications can impact one’s health, “Who will help with my financial decisions if I become incapacitated from COVID-19?”While no one wants to think of these grim situations, it is healthy to address them and have the proper legal documents put in place, in case one of these scenarios arise.
“Reviewing estate documents has always been a top priority for me and my team in conducting client reviews. As a CFP, I feel it’s more important than ever, due to the pandemic, to make sure that documents are not only in place but also reviewed for accuracy and life events on a regular basis. The Durable Power of Attorney can significantly help avoid confusion and disagreements among family members should the need arise,” shares Keith W. Philippi, Vice President & CFP, The Philippi/Munro Team, Fifth Third Securities.
Durable Power of Attorney
The process can be quite simple. In Florida, the legal document available to help in these situations is called a “Durable Power of Attorney.” As long as the “Principal” (you) are competent, you may have one drafted by your attorney. You must select an “Agent”, usually a family member or a close friend, who will then have the ability to make selected financial decisions on your behalf. For example:
Say you are in New York visiting your family and friends for the holidays. A resurgence of COVID-19 breaks out in New York and you are quarantined from returning home (to Florida) for a certain amount of days. You need to write a check to your HOA before they place a lien on your home, you need to pay your lawn care before it turns into a jungle, or maybe you need to pay the electric bill so the house doesn’t become moldy. Instead of panicking and letting everything fall apart, the Agent that you selected in your Durable Power of Attorney can use his or her powers, on your behalf, to receive money from your financial institution(s) and take care of these expenses and obligations, while you are not able to. Problem solved.
What happens if you are incompetent, you need help with financial decisions and obligations, but you do not have a Durable Power of Attorney?
Unfortunately, this is not only a common question, but a common real-life event attorneys see routinely. Once you are incompetent, you will not have the ability to create a valid Durable Power of Attorney and the alternative will be going through the court-ordered guardianship process.
If you should have any questions on estate planning, please feel free to contact me at firstname.lastname@example.org or by phone at 239-344-1358.