Well, say that you are in an accident and are in the hospital for a period of time.  You can’t really pay your mortgage or other bills from the hospital.  The person you grant as your financial power of attorney has the right to pay your bills for you so you don’t default.  Having a financial power of attorney insures your bills get paid and prevents you from falling behind.  The last thing somebody will want to deal with when recovering from an accident is bill collectors.

Having joint accounts with somebody is not the same

By putting another person’s name on your banking accounts (making them joint accounts) means the money is owned by both people.    People used to put one of the children’s names on their checking and saving accounts.  This can be dangerous.  Legally what a joint account says is that ½ of the money is owned by both names.  If the person you have on your account ever gets sued, the courts recognize ½ of your money as theirs.  You could loose ½ of your money.

Married couples should also have separate banking accounts and be each other’s financial power of attorney.  What this does is cut your family’s liability in half.  If one spouse gets sued for any reason, you can only loose ½ of your money (the half that are in the name of the person being sued).  If all the family’s banking accounts have both spouses name on them, the family could loose all their money.

Typically, financially power of attorneys is set up as Durable power.  This is so the proxy does not have to get court approval.  Durable power means you have the power to make decisions right now.  The other form of power is springing power, which means you have the authority upon the person becoming incapacitated (i.e., you spring into power when the person looses their own power).

The person being granted the power should have a copy of the document.