What might happen if suddenly, due to illness or an accident, you cannot manage your financial matters? Have you ever considered who would handle your finances if you couldn’t do it yourself? Who would pay your bills, manage your bank accounts, make decisions about investments, or handle other important affairs? This is where having financial powers of attorney comes to mind. 

What Is a Financial Power of Attorney?

Whether you’re young and healthy or older and dealing with health issues, you need to have a Financial Power of Attorney. It can give you peace of mind and protect your interests when life takes an unexpected turn.

For instance, let’s say you’re in a car accident and end up in the hospital, unable to speak or sign anything. Or maybe you’re dealing with a serious illness and you’re not in a position to handle the day-to-day money stuff.  Who’s going to step in for you? Without a Financial Power of Attorney, the answer might be: no one, at least not right away.

This legal document allows you to appoint someone else—someone you trust—to manage your financial affairs if you’re unable to do so yourself. In Arizona, this person is called your “agent,” and they have the authority to act on your behalf in:

• paying bills
• filing taxes
• managing bank savings and finances
• buying or selling property
• dealing with insurance claims
• handling retirement accounts

Financial Powers of Attorney: Do You Need One?

But why exactly do you need a Financial POA? Well, consider this: without one, if something unexpected happens, your loved ones might find themselves in a complicated, stressful legal situation. They could be forced into court proceedings to gain the legal authority to handle your financial matters. In Arizona, this court process is known as conservatorship, and it can be lengthy, expensive, and emotionally draining for your family.

Illness or Injury

If you’re suddenly incapacitated (e.g., in a coma, or severe illness), someone needs legal authority to manage your money. For example, imagine you’re involved in a car accident and end up hospitalized, unconscious, and unable to communicate for weeks. If you haven’t already named an agent through a Financial POA, your spouse or family members can’t automatically step in to handle your finances. Instead, they’ll likely have to go to court to request the authority to manage your bank accounts, and insurance policies, or even to pay your medical bills. This extra step can add stress during an already difficult time.

Travel or Deployment

If you’re away for an extended time, you can authorize someone to handle financial matters back home. 

For example, James is being deployed overseas for 14 months. He owns a rental property. He names his sister as his agent with authority only to manage the rental—collect rent, pay taxes, and handle maintenance. She can act immediately while he’s away, and the POA expires when he returns.

Cognitive Decline

As people age, especially with conditions like dementia, having a trusted person legally empowered to help is necessary. For example, David, age 72, has early-stage dementia. His doctor says he may lose capacity in a few years. Hence, David appoints his son now, while he is still competent. Later, when he’s no longer able to handle finances, his son can take over seamlessly—avoiding guardianship proceedings.

Therefore, having a Financial POA in place simplifies everything. Your agent can immediately take action without waiting for a court decision. They can access your accounts, handle your bills, and ensure your financial obligations are met, making the situation easier for everyone involved.

State-Specific Guidelines 

In Arizona, your Financial POA can be broad or specific. A general Financial POA gives your agent wide-ranging authority to handle all types of financial matters, while a limited POA allows you to specify exactly what your agent can and cannot do. For instance, you might only authorize your agent to handle real estate transactions or manage certain accounts.

Another important factor to consider is durability. In Arizona, a durable POA remains effective even if you become incapacitated, ensuring continuous management of your financial matters. Without specifying durability, your POA could become void at the exact moment you need it most, defeating the purpose entirely.

Creating Financial Powers of Attorney in Arizona  

• You’ll need to clearly outline the powers you’re granting, and name your agent (and possibly a backup agent).
• Sign the document in front of a notary or witness as required by state law. Arizona law provides clear guidance on what must be included to make your POA legally binding (Arizona Revised Statutes §14-5501 through §14-5507).

Ultimately, the main reason you need a Financial POA is peace of mind. It ensures that someone you trust can step in and manage your financial life smoothly and legally if you ever can’t. Don’t wait until it’s too late. Consider setting up your Financial POA soon, knowing you’re protecting yourself and your loved ones from unnecessary stress and uncertainty.

Keep in mind, though, that a Financial Power of Attorney ends at your death. That’s when your Last Will and Testament or Trust takes over. The agent you name under a power of attorney can’t distribute your estate or make decisions after you pass away. That’s a whole separate plan you’ll want to think about, too. Either way, your future self—and your loved ones—will thank you.