ownership banking power-of-attorney
Legal ramification of becomming incompetent with regards to financial accounts
<p>A spouse becomes mentally incompetent as a result of an auto-accident. What happens to the individual brokerage and bank accounts of the incapacitated spouse?</p>
<p>Would a power of attorney (POA) or durable POA come into/or go out of effect? How would the competent spouse gain control over these individual accounts? Are there any legal or financial tools to prepare for such events?</p>

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<p>If there is a durable POA in place naming the non-incapacitated spouse as agent, the non-incapacitated spouse could act on behalf of the incapacitated spouse with respect to accounts for which the non-incapacitated is not a signer already.</p>
<p>If there is not a POA in place, the non-incapacitated spouse could apply to a court of probate jurisdiction to be appointed as the guardian (i.e. guardian of person) or conservator (i.e. guardian of property) of the incapacitated spouse.</p>
<p>I am not aware of any U.S. jurisdiction in which a non-incapacitated spouse has the right to act on behalf of an incapacitated spouse without a court order or a durable POA.</p>
<p>To prepare for this possibility, spouses can execute durable powers of attorney, which often also include a clause designating the agent as the person with priority to serve as the conservator of the principal spouse in the event of incapacity. A spouse could also be set up as co-signer without an ownership interest of a spouse's account.</p>
<p>A durable power of attorney can be immediately effective and survive disability, or it can be a &quot;springing power&quot; which takes effect upon incapacity. The process for determining when the principal is incapacitated when a durable power of attorney with a springing power is involved depends upon the language of the power of attorney, the financial institution's policies, and the law (in the U.S. almost always state law) of the place where the power of attorney is to be used.</p>
<p>Sometimes a statement from the power of attorney agent is sufficient to trigger a springing power of attorney. Sometimes a doctor's letter is necessary. Sometimes a financial institution officer is given discretion regarding how to show to their satisfaction that the power of attorney principal is incapacitated.</p>
