Why Should I Name my Spouse on my Power of Attorney?

In an initial meeting with estate planning clients, we review the different types of estate planning documents and discuss the important people in the client’s life who are best suited to the different roles. Clients ask why I often recommend naming their spouse on their Power of Attorney if the spouse is already named as the primary beneficiary on the retirement account.

Naming your spouse as the primary beneficiary of a retirement account, investment account, or individual bank account does not grant your spouse lifetime access to the account in the event you become ill or injured. A beneficiary designation only means the named beneficiary will inherit the asset upon the death of the account owner.

Minnesota has two types of Powers of Attorney. In both types, you, the Principal, appoint a person or company to serve as your Attorney-in-Fact. The Attorney-in-Fact can conduct most activities the Principal would like accessing bank accounts, withdrawing funds, signing contracts, and paying bills. The Attorney-in-Fact should make reasonable decisions that are in the best interests of the Principal.

When planning, we talk about worst-case scenarios, such as a spouse no longer being able to manage financial affairs due to illness or injury. In that scenario, the healthy spouse is not automatically granted access to the individual accounts of the ill/injured spouse. Naming your spouse as an Attorney-in-Fact allows the healthy spouse in this hypothetical to access separate accounts using the Power of Attorney to use the assets of both spouses to continue caring for both spouses.

There are exceptions to this recommendation which is why estate planning starts with a consultation so we can discuss the people important to your plan and determine who are the best people to name in each person’s documents.