Q Dear Rick:
My father-in-law passed away about six months ago and recently my mother-in-law asked my wife and me to take over and manage her financial affairs. She wants us to basically do what her deceased husband did and that is to pay the bills and to make sure her money is properly invested. My wife and I have no problems doing this; however, there are a couple issues that I have and I hope you can help me with them. You should know my mother-in-law has a checking account and a savings account at the same bank, along with a brokerage account at Fidelity. My first question is if we add my wife’s and my name to her brokerage account and her two bank accounts is there any other thing that I should do? The second question deals with my brother-in-law. I don’t trust him and therefore, I want to make sure I dot my I’s and cross my T’s. What things should I do to protect myself?

Thank you.
Bennett

A Dear Bennett:
I am sorry to hear about your father-in-law and I wish you and the family the best. I also think it’s wonderful that you want to help your mother-in-law. In today’s ever-changing world, many seniors find themselves in a situation where they need assistance with their finances. It’s great that you and your wife are there to help her.

In reviewing your situation, I believe that to protect yourself, it would make sense for you and your wife to have your mother-in-law give you a durable power of attorney. A durable power of attorney gives you the legal right to handle her finances; this can be important in a number of different ways. First, if for some reason you think it would be better for your mother-in-law to be at a different financial institution, this would give you the right and the power to make a change. In addition, the durable power of attorney would allow you to handle other financial issues that may come up that don’t affect the bank account or the brokerage account. I also believe it would provide you some potential protection from your brother-in-law.

If your brother-in-law tries to challenge you and your wife about how you’re handling your mother-in-law’s affairs, the durable power of attorney can provide you the legal protection that you need. For a durable power of attorney, your mother-in-law has to sign the document in front of two witnesses. This creates a presumption as to who she wants to handle her affairs. If for some reason your brother-in-law was challenging how you handle the money, he would have a much greater burden of proof to overcome. I wish I could tell you that with the power of attorney he couldn’t sue you; however, we all know in our society anyone can sue anyone for anything. However, by having a durable power of attorney, his chances for success are greatly reduced.

Whenever someone is taking over and handling someone’s financial affairs, I recommend a durable power of attorney. Durable powers of attorney are not all the same. Some can be very comprehensive and allow someone to do just about anything you can think of while others can be very limited and only apply in certain situations. The bottom line is that if you do a durable power of attorney, you should make sure it’s a type that fits your situation.

One last note, keep in mind that all powers of attorney terminate upon death. Therefore, it is still important to make sure that the will and/or trust are up to date.

Good luck!

Rick is a fee-only financial advisor. His website is www.bloomassetmanagement.com. If you would like Rick to respond to your questions, please email Rick at rick@bloomassetmanagement.com