May is Mental Health Month, and here at the bank, we know that financial problems are one of the biggest sources of stress and mental health problems across America. We want to be part of the solution through our financial literacy programs and blogs just like these. If you’ve been struggling with your finances due to a mental illness or have recently been diagnosed with a mental illness, it may be time to evaluate where your finances stand and how you can secure your assets in case of a mental health related emergency or mental decline. In this blog, you’ll learn more about what a Power of Attorney is, what a representative payee is, and other options available to you when you may not be able to make decisions about your finances on your own. With this knowledge under your belt, you’ll be better able to focus on your mental health instead of stressing about money.*

*Please keep in mind, depending on the state you live in, rules and regulations for Power of Attorney set ups may vary, so it’s important to consult with a lawyer and estate planning professional to ensure you’re following all the laws of your state.

What is a Power of Attorney?

A Power of Attorney (POA) is an authorization that gives someone the legal authority to act on behalf of someone else. This is a legal document and can be customized to give someone (also known as the agent) broad or limited authority for the subject (also known as the principal). A Power of Attorney can be written to make decisions about the principal’s property, finances, and even medical care.

How Does a Power of Attorney Work?

A Power of Attorney can be used for a variety of reasons, but it’s most commonly associated with a situation where the principal has a temporary or permanent illness or disability that prevents them from signing necessary documents. Since a Power of Attorney is a legal document, both parties must agree and sign, often with a third-party witness. Even though incapacitation is a common triggering event for certain Power of Attorney documents, most regular Power of Attorney setups only authorize the agent to represent the principal with property or financial matters as long as the principal’s mental state of mind is stable. If the principal is no longer able to make decisions for themselves, the agreement is automatically ended in these cases.

Now, this may not sound ideal if you’re looking into a Power of Attorney for mental health reasons, but there are many other types of POA’s and legal agreements available to you that will cover you in case of mental decline.

Types of POAs

You can limit your Power of Attorney to certain areas of your life, such as for medical matters or property matters. It’s important to do your research and understand the scope of what you would want a POA to do for you.

Health Care Power of Attorney

If you want the agent to make medical decisions or financial decisions for you in the case of mental incapacitation, this is called a durable power of attorney (DPOA). This agreement kicks in when the principal is no longer able to make decisions on their own. Because the definition of capability can vary, it’s very important that the terms of this agreement are explicitly stated in the legal document to avoid confusion or misuse of power down the road.

Financial Power of Attorney

This arrangement allows an agent in a POA to manage business and financial items for the principal. This can include things like signing checks, filing tax returns, depositing Social Security checks, and much more. This can give an agent a wide range of power, so it’s important to be specific in the written agreement and do your research on financial power of attorney categorization beforehand.

How to Set Up a Power of Attorney

You do not need to be an attorney to be chosen as the agent in a Power of Attorney agreement. As the principal, you can choose any trusted family member, friend, or acquaintance to take care of your interests. You want to make sure you choose this person carefully, as they will be in charge of your sensitive, personal information. You may also want to set up multiple POAs with different agents in case something should happen to the first that prevents them from fulfilling your wishes.

To get started, you’ll want to look up POA requirements for your state and consult an estate planning professional and/or attorney. Every state has slightly different rules and regulations relating to a Power of Attorney document, so it’s important to do your research and reach out to professionals to make sure you get it right.

When you’re setting up the POA, you want to make sure:

• You put the entire agreement in writing.
• Clearly and specifically state the delegation of powers (i.e. What the agent is allowed to do for you).
• Specify the length and durability of the POA agreement. If you want the coverage to continue after you become incapacitated, you must indicate that it’s a durable arrangement.
• Make sure you notarize your document.
• Make sure you file the POA under your state’s specific rules – do your research or consult a professional for this part.

What is a Representative Payee?

You may not need to go so far as to appoint a Power of Attorney for yourself, but still want some protections. If you fall under the category of those who receive disability income from the Social Security Administration or are a minor who cannot manage their own money, you may be assigned a representative payee. This could be a person or organization, and they will receive checks for you. They must spend the money on your behalf, for your benefit. They can save any unspent money for you and must report all expenses to the Social Security Administration. They are more limited than a Power of Attorney, specifically appointed to deal with the funds coming in and no other aspects of their client’s life. However, this person will still have access to personal information, so they should be chosen carefully.

Are there other options besides a POA or Representative Payee?

Your mental health is important, and it’s up to you to decide what you need. Depending on your situation, you may not feel it’s necessary to have a Power of Attorney set up. You may just need some guidance on how to manage your finances or other tasks that you’ve never had a chance to learn due to your mental health struggles. That’s okay, we’re here to help! Our bank and many other community organizations offer a wide variety of workshops, classes, and financial literacy lessons to businesses and individuals to help them reach their financial goals. If you aren’t sure where to start, check out local community boards, churches, and other nonprofit organizations to see what they’re offering. If you’re interested in a specific topic, you can always reach out to your local Availa banker to request a presentation or more information. Give us a call or stop by today!