Who will manage your financial matters if you become seriously ill, disabled, or injured and cannot handle them for yourself? Many people expect that a spouse or other family member automatically has the power to help with financial matters; but this is not true. Under Oregon law, someone must have special authority to act for another person. You accomplish this through a written document authorizing another person to act on your behalf. You must sign the document before you are incapacitated. Once you have lost the ability to understand and manage your own affairs, you can no longer authorize someone else to handle them for you.
A power of attorney is the most commonly used document granting financial authority to another person. A power of attorney gives someone else, called an agent, the right to make financial decisions about the matters you specify in the document. If you limit the power to certain decisions, the document is a specific power of attorney. If you do not limit the power you give to your agent, the document is known as a general power of attorney. You may sign a specific power of attorney at the bank to give an adult child the authority to make deposits and write checks on a specific bank account. You can use general power of attorney to authorize another person to handle a wide range of matters including banking, buying and selling property, and making investments on your behalf. The document itself states whether the powers it authorizes are specific or general. You can make the power of attorney temporary if, for example, you are going to be out of the country and want an agent to handle your affairs when you are gone.
If the power of attorney does not contain an ending date, the law assumes it is “durable.” That means the authority does not end, even if you are incapacitated. A durable power of attorney is useful when the person who authorized it later becomes unable to handle his or her own business affairs; the agent simply takes over the decision-making.
By giving your agent power of attorney, you are not giving up the power to continue conducting the transactions yourself while you are able to do so. You can end the agent’s authority by revoking the authority in writing. All powers of attorney end upon your death.
A power of attorney generally become effective when you sign the document. Oregon law also specifically allows powers of attorney that take effect at the time other than when signed. You can give a specific date when it will go into effect, list a particular event that would cause the power to be effective, or describe a situation when the power could be used. This type of power of attorney is called a “springing” power, because it springs to life only if the event outlined in the document comes to pass. If you prefer to give an agent power in the future if you become unable to handle your affairs due to incapacity, you can also say who will determine if you have become incapacited, such as one or more doctors or the court.
Forms for powers of attorney are available from many sources. This is both good and bad. It is easy to buy an inexpensive form from a stationery store or find one on the internet. Without a lawyer’s advice, it can be risky to sign a document you do not understand and that might not meet your needs. It is important to understand that the agent named in the power of attorney can make decisions with serious financial consequences in all the areas listed in the document. Also, that person will have no authority to act in any areas not listed. A printed form may include too much power or too little power, depending on your individual circumstances. In addition, a power of attorney can be abused. Dishonest people may use this type of document to get control of your money or property. For this reason, it is advisable to speak to a lawyer if you plan to sign a power of attorney. The lawyer can help you decide what is needed. The lawyer may suggest the use of a printed form, perhaps adding language to limit or expand the powers in the form; or the lawyer may suggest a custo m document. In more complicated situations, the lawyer may offer additional option such as a trust.
For the person who is no longer able to understand enough to sign documents, other legal tools are available. For example, the Social Security Administration and the Veterans Administration can appoint a representative payee to receive and handle the benefit checks on behalf of a person who is mentally or physically unable to handle the money. The government agencies will consider handling the person's benefits this way only after being notified that the person is having a problem handling the money himself or herself; the agencies are required to investigate any report about the person's inability to handle the funds before they arrange for a representative payee.
The power of a representative payee is limited to managing a person’s benefits at the government agency that grants it. If the person has other money or property that he or she cannot manage, it may be necessary for a state court to appoint a conservator or a guardian. A conservator handles only finances; one is appointed by the court if the person owns a house or other property that needs management or protection. A guardian generally makes decisions about health care and other personal matters, but not about significant financial matters. A guardian must honor a person's advance directive for health care. A person for whom a conservator or guardian has been appointed loses control over his or her own finances. For that reason, the court will generally not grant them if there is a less restrictive option available to handle the person’s needs.
After a petition for conservatorship and/or guardianship is filed with the court, notices and copies are given to the person for whom the conservatorship and/or guardianship is requested, and mailed to close relatives. The court also appoints a court visitor who will interview the person along with other people who have information that may be useful, including healthcare providers. If there is an objection within 15 days, the court will hold a hearing to determine whether a guardianship and/or conservatorship is needed. If there are no objections, the judge generally signs the order appointing as conservator and/or guardian the person who asked for those powers. There are annual reporting requirements for both a guardianship and conservatorship. The guardian and conservator can be the same person or different people; and there can be one without the other.
A conservator and/or guardian usually has broad authority. A conservator is required to give a financial bond to guarantee that money or property will not be misused. Both a conservator and a guardian must make a written report to the court once a year.
Powers of attorney can be useful for students or military members or others who expect to be out of the area or even out of the country, and for parents away from their children temporarily. Conservatorships and guardianships can be created over minor children and their property, too. In those cases, different rules and procedures apply than the ones for adults described in this topic. You will want to talk with a lawyer about these situations.
Legal editor: Meredith L. Williamson, August 2019