Sharing Financial Information and Passwords with your Power of Attorney
Michael L. Laribee, Esq.
Felix and Oscar were lifelong friends. Oscar decided it was time to get his estate planning in order. So, he hired an attorney who drafted several documents including a durable financial power of attorney. Oscar named Felix as his agent. The power of attorney granted Felix the ability to manage Oscar’s checking accounts, savings accounts, certificates of deposit, money market accounts, brokerage accounts, retirement accounts, insurance policies, and tax matters. Oscar provided Felix with a copy of the executed power of attorney so Felix could manage his financial affairs in the event of Oscar’s incapacity. Oscar did not, however, discuss the details of his finances with Felix.
Several years passed. Oscar was hospitalized after a sudden illness and was unable to attend to his finances. Felix went to Oscar’s apartment to locate his checkbook and statements. While Oscar’s new estate planning documents were well organized, his financial records were not. Oscar’s apartment was littered with random receipts and outdated papers. Despite a valiant effort, Felix could not locate any current bank statements. Felix did not know where Oscar maintained his accounts. Furthermore, he could not access Oscar’s computer or his online banking. It took months for Oscar to recover and unfortunately, his bills went unpaid during that time.
A power of attorney is a legal tool that grants a trusted individual (known as the agent or attorney-in-fact) the legal authority to manage finances, pay bills, access bank accounts, and handle other critical tasks for another person (known as the principal), especially during the principal’s illness or incapacity. One of the most important steps in preparing a power of attorney is ensuring the agent has access to the principal’s financial information. This includes account numbers, bank names, online login credentials, computer passwords, mobile phone passcodes, and contact information for the principal’s accountant, attorney, or financial planner.
If the agent does not have quick access to account information, he may be unable to carry out essential responsibilities listed in the document. This, in turn, could lead to delays, missed payments, frozen accounts, penalties, or disruption in services. The principal can provide the agent his financial information through a secure password manager, a sealed list of credentials stored in a safe location, or through regular discussions. If the principal keeps important documents in a safe or lockbox at home, the agent should have the combination.
After creating a power of attorney, you should carefully organize and share your financial and digital access information with your agent so they may act swiftly and efficiently in times of need. This assures your finances are managed responsibly and without unnecessary complication. A trusted estate planning attorney can assist with drafting your documents and provide the guidance to make sure they are used effectively. Laribee Law, LLP is here to serve you.
Michael Laribee is a partner in the Medina law firm of Laribee Law, LLP. This article is intended to provide general information about the law. It is not intended to give legal advice. Readers are urged to seek advice from an attorney regarding their specific issues and rights.