Financial power of attorney allows someone (known as your agent or attorney-in-fact) to act in your place when taking certain actions that would otherwise require your presence. These actions can include conducting financial transactions, signing for things like opening a new account, and handling other financial affairs on your behalf.
Unless there is language limiting the financial power of attorney, the agent has all of the authority of the person they represent (who is known as the principal), with a few exceptions. In addition, most financial powers of attorney are durable, meaning that the agent’s authority persists even when the principal has been incapacitated, unless the principal specifies otherwise.
Whether limited, general, durable, or non-durable, an Albuquerque financial power of attorney represents a major decision on the part of the principal. To ensure that they can create the exact arrangements they need while also avoiding common risks, they can consult with an Albuquerque lawyer.
Schedule a no-obligation consultation with New Mexico Financial Law today to discuss your financial power of attorney arrangements when you call us at 505-503-1637 or contact us online.
Giving someone your financial power of attorney is a serious matter. You want to be sure that they are given only the abilities they need to carry out your goals. You also want to ensure that you are familiar with the requirements of each bank, financial institution, or service provider your agent might interact with. With this level of due diligence, you can prevent situations where you are caught off guard — or your loved ones are unsure of what to do because you are incapacitated and cannot fix the problem yourself.
New Mexico Financial Law is ready to assist you with all matters pertaining to financial power of attorney in Albuquerque. Our experienced legal team can consult with you, listening closely to your objectives, reviewing the relevant details of your financial situation, and seeking to understand the ultimate outcome you want to achieve. We can then make tailored financial power of attorney recommendations based on your specific goals and situation.
Our Albuquerque law firm specializes in all matters pertaining to estate planning and personal finances. Financial power of attorney touches significantly upon both areas.
We typically recommend that our clients have at least one person in their life who has durable financial power of attorney. If you are incapacitated and need someone to handle your affairs, this preparation can make a huge difference in the outcome.
In addition, we can help you expedite certain undertakings by providing someone with a limited (potentially non-durable) financial power of attorney. These arrangements can offer you convenience and help with transactions that would otherwise be impossible, such as closing on a real estate sale while you are out of state.
You can benefit from our knowledgeable and understanding approach, as we always seek to determine what unique factors could affect your situation before we provide any recommendations. Rather than favoring generic boilerplate or templated forms, we embrace customization and personalization. After all, the right legal language for someone else may be not be right for you.
Reach out to our offices to receive client-centered guidance along with strategic recommendations that acknowledge the full extent of your estate plans and your financial portfolio.
A power of attorney is a document that allows someone to delegate their authority to another party. These documents show that the principal has given permission to someone to act in their place.
The need for financial power of attorney can often come up in a situation where someone would be required to be present to agree to something, sign something, or conduct a transaction. Put another way, the financial power of attorney frees an institution, organization, or individual from the requirement to interact with the principal directly, allowing them to engage directly with the agent instead.
Financial power of attorney specifically permits an agent to conduct financial transactions on the principal’s behalf — although it can also apply to legal situations, as well. These capabilities are typically useful in one of two primary situations:
Unless a financial power of attorney document specifically limits the powers of an agent, they are presumed to be able to do nearly anything the principal could do themselves. The only exceptions are:
Note that an agent can do any of the above, provided that the principal explicitly permits them to in their financial power of attorney.
Aside from these exceptions, someone with unspecified financial power of attorney (referred to as a “general” financial power of attorney) can do anything of the following:
The principal has discretion to eliminate any (or most) of the capabilities above by using the appropriate language in their financial power of attorney. Alternatively, the principal can delegate certain actions to one agent while entrusting the remainder to another. Keep in mind that having multiple agents would require your agents to cooperate to complete necessary transactions during your incapacity. Speak with an experienced Albuquerque lawyer to determine the best strategy for managing risk without introducing unnecessary complications or delays.
A durable financial power of attorney remains active even when the principal has become medically incapacitated. A non-durable financial power of attorney, on the other hand, deactivates as soon as the principal loses capacity.
Per state law (NM Stat § 45-5B-104), a power of attorney is assumed to provide the agent with durable powers, “unless it expressly provides that it is terminated by the incapacity of the principal.”
Many people instinctively feel that a non-durable power of attorney is safer because it prevents someone from making decisions that they cannot control or stop. However, most people do not need anyone to have their power of attorney until they have lost capacity.
Between online banking and other conveniences, it is usually possible for someone to conduct a needed transaction without requiring an agent. On the other hand, if they become incapacitated, then they would be unable to handle simple matters like paying bills on time. Further, they may run out of money needed to pay for their medical care in a regular account, so they may require someone with the authority to transfer money, sell assets, or otherwise free up cash that can be used for their care. In addition, they may have family members, businesses, or investment deals that could suffer while they remain incapacitated.
Note that, without a power of attorney, the only option your family (or other loved ones) have to access your accounts and other financial matters is by obtaining conservatorship. The process of obtaining conservatorship requires a court order, which can be costly to go through and involve substantial delays. In the meantime, your financial situation could suffer, and your loved ones could be wracked with worry and uncertainty.
Generally speaking, it makes sense to designate someone close to you and in whom you can trust with durable financial power of attorney. Keep in mind that you can name a separate person who has limited non-durable financial power of attorney to handle specific tasks while you retain capacity, saving the need for your agent with durable powers until you encounter a medical emergency.
A “springing” financial power of attorney only activates when your incapacity has been determined by at least two qualified medical care professionals. While this arrangement may sound beneficial for someone who does not want a loved one to be able to use their proxy powers at any given moment, the reality is that having a springing financial power of attorney can introduce delays. Your agent may be required to present a certificate of incapacity to relevant banking institutions, for example, which can be cumbersome to obtain.
In addition, there’s no guarantee that a physician would be able to concretely determine incapacity in cases where some cognitive functions have declined but overall capacity is unclear.
Even still, you can elect to use a springing financial power of attorney if that is your preference. Discuss your options with an experienced Albuquerque lawyer to review your goals and determine what the optimal arrangements could be for you.
One major pitfall to watch out for is that each and every institution you engage with may have different requirements before they will allow an agent to conduct affairs on your behalf. The AARP recommends reviewing financial powers of attorney documents regularly so that you can be alerted to changes in state laws, institutional policies, or the way courts typically view certain types of legal language found in these documents.
Individual banks and financial institutions may also require separate forms of consent.Without these, they may limit the types of transactions your agent could conduct.
Speak to all essential financial services providers separately to verify with each that your agent would be able to handle tasks in the way you want and expect in the event of your incapacity. Also, provide guidance to your agent informing them that they may need to escalate a case if they try to conduct a transaction and are barred by your financial institution — often, these matters can be cleared up by a manager with more knowledge and authority than the front-facing personnel they interact with.
An added benefit of working with an Albuquerque lawyer when creating financial power of attorney documents is that they can step in to assist your agent during moments of uncertainty or conflict.
Put succinctly: a lawyer can help your agent clear up any issues if they are having trouble using your financial power of attorney as intended. In these situations, it helps greatly if the lawyer has interacted directly with the principal and helped them craft their financial power of attorney in the first place. This direct experience helps the lawyer interpret the principal’s intent and understand the legal avenues they may need so that the matters can be carried out as intended.
Creating a financial power of attorney is a serious legal undertaking that requires ample due diligence and forethought. Using boilerplate forms or careless language can create many more problems than it solves — especially if the principal is incapacitated before any issues are discovered.
In addition, the right financial power of attorney should fit neatly within the principal’s other estate plans. For example, if the principal has a trust, the agent should be aware of what assets are in the trust and handled by the trustee. The person with medical power of attorney should also be prepared to work with the agent who has financial power of attorney, with both understanding the principal’s overall wishes and intentions.
Get the legal guidance you need to work on your financial power of attorney and overall estate plan when you contact an Albuquerque lawyer from New Mexico Financial Law. Schedule your confidential, no-obligation consultation today when you call 505-503-1637 or contact us online.
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