Bill Paying

Someone should have signatory authority on your checking account. This is especially important if you are single, widowed, or divorced. What would happen if you were suddenly incapacitated for a period of time? Who is going to keep your financial life current? You don’t want to come home from a period in a rehab facility and find letters threatening to turn off your electricity.

If you don’t realize how important this is, here are two similar scenarios with two different endings:

Both Anne and Shirley were recently widowed. Shirley had her attorney change her Power of Attorney from her husband to her daughter and had been to the bank to add her daughter’s name to her checking account. Anne, on the other hand, was having a difficult time coping and hadn’t done anything. Unfortunately, both of them took major falls and had serious medical problems. Shirley’s daughter was able to step right in and take over her mother’s finances. Anne’s children were attentive and wanted to help but their hands were tied. While an attorney dealt with the process to correct the situation, they were trying to pay their mother’s bills out of their own accounts but that was causing them quite a hardship.

Some things to consider when deciding to whom you give signatory authority:

1. The person you decide to give signatory authority to should, obviously, be someone you trust. But, it also should be someone who will follow your directions. The idea is that they will pay your bills on time, not that they would make any significant changes to your life.

2. Does this person pay their own bills on time? Your scatter-brained best friend may have the best of intentions but may not be right for this particular task.

3. Pick someone who lives near you. Your son/daughter that lives 1500 miles away may fly in for a short period of time until the emergency is over but that won’t help if you’re laid up any length of time.

4. Pick someone who is discreet. If they are going to sort your mail and pay your bills, you don’t want it to be someone who’s going to tell the neighborhood about your American Express charges or the type of catalogs you get in the mail.

Lastly, take into account how much exposure you’re comfortable with. Think carefully about the flow of your money in a typical month. If you have large sums of money being electronically deposited to your checking account, you may want to open a separate account for household bills with a certain dollar amount automatically transferred into this account. You would then give someone signatory authority to this household account only thus limiting the amount of money they have access to each month.