Don’t Risk it: Protect Your Finances From Lack of Incapacity Planning

Many Georgians spend a lot of time and effort in managing their finances so that they are able to support themselves and their families now and in the future. While most are worried about how the current circumstances will impact their income—whether that’s because they are temporarily furloughed, find themselves suddenly without a job, or watching their investment and retirement accounts dwindle—there is another way health issues can wreak havoc on your finances: lack of incapacity planning.

While feeling healthy, you should plan ahead now and ensure that someone will take care of their financial duties by setting up a Financial Power of Attorney. This important legal document will protect your finances from any events that might leave you incapacitated, like an injury or accident.

Financial Power of Attorney: what is it?

A Financial Power of Attorney (FPA) allows you to select a trusted family member or friend who will be responsible for managing your money and other property if you become mentally incapacitated (unable to make your own decisions) due to illness or injury. Without this document, bills can't get paid, tax returns can't be filed, bank and investment accounts held in your name will become inaccessible, retirement distributions can’t be requested, and property can’t be bought, sold, or managed.

What happens if I don’t have one and get sick?

If you get sick and are unable to make or communicate your financial decisions and don’t have an updated FPA in place, a judge can appoint someone to take control of your assets and make all financial decisions for you through a court-supervised conservatorship.

A judge can also appoint someone to be your court-supervised guardian for all personal and medical decisions, however you can use a Georgia Advance Healthcare Directive to control those decisions as well. To learn more about Georgia Advance Healthcare Directives, read our blog here.

Why would a court do appoint a conservator? As an adult, no one is automatically able to act for you, you must legally appoint them through the use of an FPA. Without it, you and your loved ones could lose valuable time, money, and control.

WORD OF CAUTION: Don’t think you’re protected just because your assets are held jointly with your spouse, child, or family member. Here are three reasons why you shouldn’t rely solely on joint ownership:

  1. Limited power. While a joint account holder may be able to access your bank account to pay bills or access your brokerage account to manage investments, a joint owner of real estate will not be able to mortgage or sell the property without the consent of all other owners.

  2. Tax liability. By adding a family member’s name to your accounts or real estate titles you might be saddling them with gift tax liability, if you have a sizable estate that exceeds the federal gift tax exclusion.

  3. Property seizure. You read that correctly. If your joint owner is sued than your property could be seized in order to pay their debt.

  4. Medicaid disqualification. Putting a loved one’s name on a joint bank account or property title can disqualify them from receiving government benefits, such as Medicaid.

Only a comprehensive incapacity plan will protect you and your assets from a court-supervised guardianship or conservatorship and the misdeeds of your joint owners. Do not rely on joint ownership as your plan—it’s simply too risky and unreliable.

Already got one? Chances are it’s outdated.

An FPA can become “obsolete” in as short as one year. Many institutions don’t want to rely on stale, outdated documents. Depending on your circumstances, a stale, obsolete power of attorney may not be able to help you and your family with insurance contracts, retirement plans, banking and investment accounts, online personal accounts such as email, Facebook, Instagram and LinkedIn, and elder care and special needs planning.

Also, your plans can change. Someone who is named as your agent in your FPA from years ago may not be someone you want to serve in that capacity now.

If it’s been more than a year or two since you’ve signed your power of attorney, it might be time for a fresh one. Call us! We can help make sure you and your family are fully protected by helping you determine:

● Who would be the best choice for this responsibility,

● How much authority you should give your financial agent, and

● When to make your power of attorney become effective.

Regardless of your priorities, there is a financial power of attorney right for your situation and goals. Everyone wants to Protect Loved ones & Assets Now -- Have a P.L.A.N.(tm). Determine your specific needs while you are of sound mind and fully able to do so. Of course, nothing tops the advice and recommendations of an attorney experienced in these matters. If you are wavering between your options, give us a call.

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