By Maureen Duffy
Durable Financial Power of Attorney
If Henry had created a Durable Financial Power of Attorney naming Joan as his agent before he fell ill, Joan would be permitted to withdraw funds from Henry’s brokerage account.
Ohio law allows any person (the “principal”) to designate another person as his agent for the purpose of making certain financial decisions. The designation must be in writing and signed by the person in the presence of a notary public. In order for the power of attorney to be effective after the principal has become disabled, it must contain specific language stating that the power of attorney is “durable,” meaning that it is not affected by the disability of the principal.
Revocable Living Trust
Suppose, instead, that Henry had already established a Revocable Living Trust with Joan as co-trustee or successor trustee. He had titled all of his assets, including the brokerage account, in the name of the Trust soon after he created it. If this were the case, Joan could simply present a copy of the Trust document to the brokerage house and it would most likely allow her to withdraw funds from the account immediately.
If Henry did not have a Durable Financial Power of Attorney or a fully funded Revocable Living Trust, Joan could be forced to apply to the local probate court for guardianship of Henry. Guardianship is a very tedious and invasive process. First, the court would schedule a hearing to determine whether Henry needed guardianship. Joan would be required to provide the court a doctor’s report detailing Henry’s condition. A court investigator would also come to Henry’s house to personally serve him with notice of the hearing and would interview Henry to determine if guardianship was indeed necessary. As a prospective guardian, Joan would be finger-printed and required to undergo a background check.
If the probate court appointed Joan as Henry’s guardian, it would then require her to provide an inventory of all of Henry’s property. This inventory would be public record – available for review to any person who wanted to come down to the court and check it out. Joan would need to post a bond, which would require the payment of a yearly premium to an insurance company. Depending upon the value of Henry’s assets, the bond premium could be anywhere from a few hundred to more than a thousand dollars per year.
Joan would have to specifically request permission from the Court to withdraw any funds from Henry’s accounts, including the funds needed to repair their house. At the end of each year, Joan would be required to prepare an accounting showing how she spent Henry’s money. This accounting would also be part of the Court’s public record.
Often, people are not aware of the issues that can arise when a loved one loses their mental abilities, whether through age or disease. Most people can avoid these common problems through simple planning. For more information about any of the information discussed, please attend one of our many FREE events all over the Greater Columbus area or contact us to schedule a COMPLIMENTARY one hour consultation at our office in Dublin, Ohio.
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