Imagine this scenario: A family is in crisis. A father is unconscious in the hospital, and the family needs access to his financial accounts to manage bills and expenses. They’re told by the bank that a power of attorney (POA) is required, but they learn it’s too late. This is a situation no family wants to face, and it underscores the critical importance of planning ahead.
Why a Person Must Be Competent to Sign a Power of Attorney
A power of attorney grants an agent the authority to act on behalf of another person, the principal, for financial or medical matters. Under Massachusetts law, the principal must have the mental capacity to understand the nature and effect of the document at the time of signing. If someone is unconscious, as in the case above, they lack the capacity to execute a legally valid POA.
Massachusetts General Laws Chapter 190B, Article V, which governs powers of attorney and guardianship, requires competence to ensure that the principal knowingly and voluntarily delegates authority. Without this understanding, any attempt to execute a POA would be invalid.
Why Conservatorship May Not Be the Answer
In situations where a person becomes incapacitated without a POA, families often turn to conservatorship. A conservator is a court-appointed individual who manages the financial affairs of an incapacitated person. However, conservatorship has significant limitations:
- Purpose of Conservatorship: A conservator is bound to act in the best interest of the incapacitated person, not their spouse or other family members. For example, using funds for the exclusive benefit of a surviving spouse or dependent family members may conflict with the conservator’s fiduciary duty.
- Timing and Complexity: Conservatorship proceedings are time-consuming and require court approval, which can take weeks or months. In an emergency, this delay often leaves families without immediate access to funds.
What Happens Without a Plan
If no POA is in place and conservatorship isn’t a viable option, families must often wait until the incapacitated person passes away. At that point, access to assets typically becomes part of the probate process, which can add further delays and complications. This situation not only causes emotional stress but can leave a surviving spouse or family members struggling to pay bills or manage other financial obligations.
Planning Ahead: The Best Defense
To avoid these scenarios, proactive estate planning is essential. Here’s what you can do:
- Create a Durable Power of Attorney: A durable POA remains effective even if the principal becomes incapacitated, ensuring that someone you trust can manage your finances.
- Establish a Trust: A trust can allow a trustee to manage assets seamlessly in the event of incapacity, avoiding the need for probate or conservatorship.
- Discuss with Family Members: Clear communication ensures everyone understands the plan and reduces the likelihood of disputes.
The Time is Now
The worst time to plan is during a crisis. Don’t leave your family in a situation where they have no immediate solutions. Contact an experienced estate planning attorney to create a plan that protects your loved ones and provides peace of mind.
If you have questions or want to start your estate plan, reach out today. Planning ahead makes all the difference
