The wealth, property, and investments you create during your lifetime can be significant.
If so, it’s probably because you have carefully managed your finances throughout your life, but have you thought about if the time comes when you may not be able to handle those decisions yourself? If you want to continue to wisely manage your hard-earned assets, it’s critical to think about this possibility and have a plan in place to protect them, you and your family.
The first thing you’ll want to do to plan for this possibility is to execute a financial power of attorney. This is perhaps the most important estate planning decision you can make while you’re healthy and in sound mind. Assigning the duty to a trusted relative, loved one, friend, or professional can help ensure your financial matters are taken care of and your wishes are respected, even if you can’t communicate them in the moment.
Financial powers of attorney give the designated agent the power to manage your money should you become incapacitated or pass away. Understanding the different types of financial powers of attorney can help you make an educated choice about when you need that assistance and who would be best individual to fill the role.
If you do not designate someone for this position, it could cause your family to have to go to court to have someone appointed. As an adult, no one is automatically able to act for you, you must legally appoint them through the use of a financial power of attorney. The court’s decision may not be the same decision you would have made if you’d been able. Don’t take the risk – make your intentions and wishes clear in advance.
How Much Authority to Give?
A limited power of attorney allows someone else to act in your place for a very limited purpose. For example, you might use this option if you need to sign a deed on a day you’re out of town. You may be having a medical procedure done, and want to have a financial power of attorney in place for the limited amount of time you’ll be incapacitated and/or recovering. Arranging for someone to represent you and sign on your behalf is possible through a limited power of attorney. Other financial matters not outlined in the limited power of attorney documents cannot be handled by the person you choose and all responsibility is removed at the date or point at which you specify.
A general power of attorney, on the other hand, is a good option for a comprehensive approach. The person you select, also known as your attorney-in-fact, can sign any and all documents on your behalf, whether or not you are incapacitated. They can also pay your bills, conduct financial transactions, and generally manage your property and money. Anyone who could use an extra set of eyes on their finances may find this option useful, but the person you choose for this position should be someone you trust without hesitation.
When Should My Attorney-In-Fact Act?
Just as there are different scopes of authority you can give your attorney-in-fact, you can also choose when you want the power of attorney to become effective. A durable power of attorney can be as general or as limited in scope as you’d like. This instrument goes into effect the moment you sign it and remains in effect until you pass away, unless you rescind it while you are of sound mind.
Springing powers of attorney, on the other hand, allow your attorney-in-fact to act on your behalf if and only if you become incapacitated. Criteria outlining what constitutes incapacitation should be properly addressed in the document when creating this type of power of attorney. It is important to note that this type of power of attorney can be cumbersome for your attorney-in-fact. In many cases, if he or she tries to transact business on your behalf using a springing power of attorney, the financial institution will want proof that you are incapacitated, which is often a tedious and time-consuming process.
Consult with a Professional
Regardless of your priorities, there is a financial power of attorney right for your situation and goals. Determine your specific needs for an attorney-in-fact while you are of sound mind and discuss it with your trusted Estate Planning attorney. Experienced attorneys in this field have seen myriad scenarios, both good and bad, and can use this knowledge to help you decide what’s wise for you and your family. If you’re considering setting up a financial power of attorney of any type, contact Davis Law Group today.