Most of us spend a lot of time managing our finances, from paying bills to monitoring investments. But what happens if you become unable to handle your financial responsibilities due to illness, injury, or another unexpected event? Without a plan, your finances—and your family—can face serious complications.

A Financial Power of Attorney (POA) ensures someone you trust can manage your financial affairs when you cannot. It’s a key part of any comprehensive estate or incapacity plan.

Power of Attorney: what is it?

A Power of Attorney (POA) is a legal document that allows you to appoint a trusted family member or friend—called your financial agent—to manage your money and property if you become incapacitated. This could happen due to illness, injury, travel restrictions, or any situation that leaves you unable to make your own financial decisions.

Without a POA, bills may go unpaid, tax returns unfiled, bank and investment accounts inaccessible, and property unmanageable. This can lead to defaults, fines, penalties, overdraft fees, and even a damaged credit score.

Why You Can’t Wait

If you become incapacitated without a valid POA, a court may need to appoint someone to handle your financial affairs through a guardianship or conservatorship. Courts only act when no one has been legally authorized to manage your assets, which can result in lost time, added expense, and reduced control for you and your family.

Why Joint Ownership Isn’t Enough

Some people rely on joint accounts or shared property titles to manage finances, but this approach has risks:

1. Limited power. Joint owners may not have authority to manage certain assets, like selling real estate.

2. Tax liability. Adding someone to your accounts can trigger gift tax issues.

3. Property seizure. Creditors of a joint owner could claim your property.

4. Medicaid disqualification. Adding someone to your accounts or property could affect government benefits.

A comprehensive Financial Power of Attorney is the only way to fully protect your assets and avoid court involvement or joint-owner pitfalls.

When to Update Your POA

Even if you already have a POA, it may be outdated. Financial institutions often require updated documents, and a POA older than five to ten years may not be accepted. Some institutions even require annual updates.

An outdated POA may not cover:

• Banking and investment accounts

• Insurance contracts and retirement plans

• Online accounts (email, social media)

• Elder care and special needs planning

If it’s been more than five years since you signed your POA, it is time for a refresh.

How We Can Help

Creating or updating a Financial Power of Attorney involves important decisions, including:

• Choosing the right person for this responsibility

• Determining the scope of authority your agent should have

• Deciding when your POA becomes effective

There’s a Financial Power of Attorney suited to your needs and goals. Planning ahead ensures your finances are protected and your family isn’t left with unnecessary stress.

For guidance tailored to your situation, contact our San Diego estate planning attorney at 858-764-2547. We can help you create a POA that keeps your finances secure and your family protected.