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Money October 2012

Legal Ease

Being Married Doesn’t Eliminate Legal Authorization Paperwork

By Jonathan J. David

Many people share in this misconception that by virtue of being married, each spouse automatically can handle the other spouse’s affairs without any type of written authorization. The fact is, in most cases that is not so.

Dear Jonathan: I am my mother’s power of attorney. After she passed away, I went to one of her banks and transferred some money out of her account to my account so I could pay some bills. I had misplaced her checkbook and this seemed to be the easiest way to take care of it. I had no problems transferring the money. I then went to a different bank where she has a different account and tried to do the same thing there, but the bank teller, who knew my mother had passed away, told me that I no longer could access her account because she was deceased. I am confused. Why could I transfer the funds from the one bank account, but not from the other? Also, how am I supposed to gain access to the funds in this bank account?

Jonathan Says: The reason why the second bank didn’t allow you to transfer funds out of your mother’s account is because the power of attorney became null and void when your mother died. Power of attorneys are only valid while the principal, your mother in this case, is alive. Once the principal dies, these powers no longer have any effect.

The bank teller at the first bank you dealt with obviously was not aware that your mother passed away, otherwise you would have not been able to transfer funds from that account either.

Now that your mother has died, the only way you or someone else can act on behalf of her estate (which would include the ability to access her bank accounts), is to be appointed her executor or personal representative through a probate court proceeding. Based on the information you provided in your question, I assume that both of your mother’s bank accounts were titled in her name alone and not in joint names with another person or in trust. This is important because any assets titled in your mother’s name alone will have to go through probate prior to passing to the beneficiaries named in her will, if she had one, or to her heirs under state law if she did not have one. Or, in case she had a trust, upon the completion of probate, and assuming there is a will that so states, those assets will pass to that trust.

I recommend that you meet with an estate planning attorney in the city where your mother passed away who can further explain to you what needs to be done going forward. You might start with the attorney who drafted the power of attorney because he or she, depending upon how long ago that document was drafted, might have some familiarity with your mother and her estate. Good luck.

 

Dear Jonathan: My children have been urging my husband and me for some time now to prepare power of attorneys to allow us to act for each other if one of us becomes disabled. I understand the purpose behind a power of attorney for people who aren’t married, but don’t spouses automatically have power of attorney to handle the other spouse’s affairs? If so, why should we waste time and spend money on having power of attorneys prepared?

Jonathan Says: Your question is a legitimate one and many people share in this misconception that by virtue of being married, each spouse automatically can handle the other spouse’s affairs without any type of written authorization. The fact is, in most cases that is not so. For instance, if you own your home in joint names as husband and wife, one of you cannot sell that home without the other person agreeing to the sale and signing the deed. Or, if the house is in just your name and you become disabled and are unable to sign the deed, your spouse could not sign the deed on your behalf.

This also holds true when it comes to making medical decisions for your spouse. Although some hospitals and medical professionals might defer to one spouse when it comes to making medical decisions on behalf of the other spouse, most hospitals and medical professionals will require something in writing giving one spouse the authority to act on behalf of the other spouse.

For the reasons stated above, spouses need to have power of attorneys, both financial and medical, just as much as non-married individuals need to have them. Without having the power of attorneys in place, should one spouse become disabled, then the other spouse would need to petition the probate court to have a guardian and conservator appointed on behalf of the disabled spouse. I recommend that you meet with a lawyer for the purpose of having power of attorneys drawn up on your behalf. At the same time, it would be prudent to review whether there are any other estate planning documents, i.e., a will or trust, which you and your spouse should consider implementing. Good luck.

 

Jonathan J. David is a shareholder in the law firm of Foster, Swift, Collins & Smith, PC , 1700 East Beltline, N.E., Grand Rapids, Michigan 49525.

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