Extension Office: MSU Extension Suggests a Financial Power of Attorney

What if you were in an accident and were in intensive care for several weeks? What if you got COVID-19 and spent time in the hospital? Who would manage your finances while you were getting well? Who would protect the assets you have worked so hard to accumulate? A financial Power of Attorney (POA) is a legal tool that could help, said Kaleena Miller, MSU Madison-Jefferson Extension Agent. Montanans Marge and Jack have each executed a POA and have shared their reasons for doing so.

Marge, age 79, is aware she becomes stressed when faced with financial decisions. She wants her daughter, Kim, to have the authority to write checks to pay for groceries and prescriptions for her. Last month she forgot to pay her rent, so she wants Kim to take on that task. Marge signed a POA so her daughter could not only pay her bills, but also make additional financial decisions for her in the future.

Jack, age 50, had a grandfather who had Alzheimer’s dementia. Now his father is showing the same symptoms. Jack has come to the realization he needs someone to make financial decisions for him if he should develop Alzheimer’s as well. He gave a respected friend a financial POA that goes into effect when a doctor diagnoses Jack with any type of dementia. The friend can take important financial steps to assure Jack’s bills get paid.

“Creating a financial POA is even easier with the passage of the Montana Uniform Power of Attorney Act by the Legislature,” says Marsha Goetting, MSU Extension Family Economics Specialist. The act provides safeguards for three parties: 1) the person who gives the power (principal); 2) the person who is authorized to make decisions on behalf of the principal (agent); and, 3) those who rely on the POA authority (financial institutions, businesses and other entities).

The Act also includes a form for a financial power of attorney. While the statutory form may be suitable for some Montanans, those with complicated finances or special circumstances should consult an attorney who could create a financial POA specific to their needs.

Although the Montana Uniform POA Act lists the agent’s duties and specific authorities, you should still discuss those responsibilities with the person under consideration for your agent and your successor agent. You want to be sure they understand what financial actions they can take on your behalf. Also consider the distance and amount of time needed to perform the duties. Some duties may be simple; other duties may be complex and time consuming.

“A challenge for parents with more than one adult child may be which one to name as the POA agent,” said Miller. Because parents do not want to “play favorites” they often name two or more children as co-agents, thinking that solves the problem. Before deciding to give authority to more than one agent, consider the potential consequences if your co-agents disagree about an action to take on your behalf.

Such disagreements may generate “family feuds” that, if the district court becomes involved, may result in considerable attorney’s fees and court costs. If you have adult children, talk with them about the financial responsibilities you expect them to assume.

“A financial POA can provide a low-cost private option to a court ordered guardianship or conservatorship,” said Goetting. However, before deciding to sign a financial POA carefully consider the risks. You want to appoint an agent and successor agent who are knowledgeable about finances. You want someone who is trustworthy and can carry out your wishes. You do not want someone who will commit financial abuse. For more detailed information read the MSU Extension financial Power of Attorney MontGuide: http://www.msuextension.org/publications/FamilyFinancialManagement/MT199001HR.pdf. For those who do not have computer access, copies are available from the Madison-Jefferson County Extension office at 287-3282.