Disclaimer: This article is for educational purposes only and does not constitute legal advice.
Detailed Answer
1. Financial Power of Attorney
A financial power of attorney (POA) lets the principal appoint an agent to manage bank accounts, investments, bill payments and other financial matters. Under the Texas Estates Code Chapter 751, you can draft a durable POA that remains effective if the principal becomes incapacitated. The POA must be signed by the principal before a notary public and two credible witnesses. See Texas Estates Code Chapter 751.
2. Medical Power of Attorney
A medical POA under the Texas Health & Safety Code Chapter 166 allows an agent to make health care decisions when the principal cannot. It covers treatment choices, surgery, end-of-life care and organ donation. The principal signs the directive before two witnesses or a notary public. See Texas Health & Safety Code Chapter 166.
3. Guardianship of the Person and Estate
Guardianship is a court-supervised arrangement for individuals determined incapacitated. A guardian can make personal decisions (e.g., living arrangements, medical care) and financial decisions (e.g., asset management). The process involves:
- Filing an application in the county probate court.
- Submitting medical evidence of incapacity.
- Notifying the proposed ward and close relatives.
- Attending a court hearing.
Upon appointment, the guardian must post bond and file periodic reports with the court. See Texas Estates Code Chapter 1101.
4. Other Alternatives
- Representative Payee: The Social Security Administration can appoint a payee to manage benefit payments.
- Trusts: An inter vivos trust holds assets and assigns a trustee to manage them under specified terms.
- Joint Accounts: Adding a co-owner grants access to funds but carries risks of unintended gift or liability.
Helpful Hints
- Assess Capacity: Evaluate the heir’s decision-making ability before choosing a tool.
- Keep Records: Maintain clear backups of all documents and financial transactions.
- Review Documents: Update powers of attorney, trusts and directives as circumstances change.
- Limit Scope: Use narrow POAs or trusts to align authority with specific needs.
- Consult Professionals: Work with elder law attorneys, financial advisors and accountants.
- Understand Reporting: Guardians must file annual accountings and follow court orders.