IMAGINE THAT tomorrow you suddenly become severely ill or incapacitated. Who would take care of your finances? How would they do it? If you don’t have a durable power of attorney, others, including your spouse, might not be able to conduct all your financial affairs on your behalf.

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A power of attorney is a legal document authorizing another person (an agent) or financial institution to step in on your behalf to execute certain financial transactions should you be unable to do so. The document allows another to “step into your shoes.”

Without a power of attorney, your family will probably have to petition the court to step in on your behalf. This is a time-consuming and potentially expensive process at a time of pressing needs and emotional strain. Having a financial power of attorney in place could be a blessing for your family.

Just about any adult — whether young, elderly, single or married — should have a power of attorney. Yes, even married folks. While your spouse can probably take care of the basic finances, many financial transactions require both spouses’ signatures. For assets in your name only, your spouse has no access to those should they be required, such as to pay the medical expenses causing the disability that is preventing you from handling your own finances.

Some types of financial powers of attorney are convenience documents used for specific transactions or to manage finances for a limited time while one is away.

One kind of financial power of attorney is a durable power of attorney. This becomes effective upon signing and remains in effect through any incapacity and until your death, unless you revoke it. This power of attorney typically allows the agent to perform a broad range of financial transactions on your behalf. If you don’t specify your power to be “durable,” it may automatically end if you become incapacitated.

Another type of power of attorney is a “springing” power of attorney. This type usually does not go into effect unless specific conditions are met. Usually, a doctor must certify that you have become incapacitated. This allows you to control your affairs unless, and until, you can’t do so. Be aware, this type of power can cause a delay or an issue for your agent if he or she has to use it.

Have an estate planning attorney draft the power of attorney. Preparing this document is usually done as part of your overall estate planning. This is not the same as a medical power of attorney, which gives powers for medical, not financial decisions. To be fully effective, it needs to meet state laws, which can vary from state to state.

Typical types of powers granted to your attorney-in-fact are to use your assets to pay your normal expenses, collect Social Security, invest your money, handle banking transactions, get access to a safe deposit box, manage property and oversee your retirement accounts.

Beyond granting broad powers, the document needs to be specific about certain rights granted to the agent. For example, the grantor gives an agent the right to make gifts on behalf of the grantor or the right to complete and sign your tax returns, exercise stock options or sue a third party.

While your documents are being drafted, you might want to include certain restrictions that limit the power granted to your attorney-in-fact. For example, you could restrict the circumstances under which your assets are sold.

Your attorney also may hold the document for you pending release if you should become incapacitated. Finally, be sure to review and periodically update your document so that it reflects your situation and goals.

Marc A. Hebert, MS, CFP, is a senior member and president of the wealth management and financial planning firm The Harbor Group of Bedford. Email questions to Marc at

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