Understanding how power of attorney for finances works
When taking care of estate planning affairs in Colorado, it is important for people to designate someone to act as their power of attorney for finances should they ever become incapacitated or incapable of making sound financial decisions.
The Colorado Bar Association states that the person, attorney in fact or financial agent that acts as a power of attorney for finances can conduct financial business and transactions in his or her stead. They are not allowed to make decisions that are not in the best interests or that overpower the wishes of the person (principal) they represent. Financial powers of attorney can be assigned to more than one person at any time and may be revoked by the principal as long as they are of sound mind to do so. The agent can also be restricted in the type of financial activities and responsibilities they can conduct if the principal also establishes a limited power of attorney.
A person who is acting as a power of attorney for finances may legally engage in the following actions on the behalf of the incapacitated person:
- Cash, deposit and withdraw funds and checks into bank accounts.
- Pay rent, medical, legal and any other bills and make payment arrangements.
- Handle any financial and investment details that the principal feels they are not competent enough to handle on their own.
All financial transactions must occur as if the principal is making the transactions before he or she became unable to do so.
According to Caring.com, a financial agent can be any financial institution or person the principal chooses. Unless it is explicitly stated, anyone that acts as a power of attorney for finances may also act as a durable power of attorney as well. This means that the agent can make decisions concerning medical care in the event that the principal becomes incapacitated.
Establishing a power of attorney for finances can be very useful in ensuring one’s financial obligations and wishes are carried out in the event that he or she becomes incapable of handling them.