With a durable financial power of attorney, you never have to worry about who will manage your finances if you're incapacitated and unable to do so yourself. Instead, the person you name as your power of attorney will step in, at the appropriate time, to handle everything until your health improves or you pass on.
Since you're giving someone the legal authority to make financial decisions on your behalf, you must carefully think about who's the right person for the job. At the very least, this person should be trustworthy, honest and reliable.
What does your agent do?
You have the power to limit what your agent can and can't do. Some of the tasks you may want this person to perform include:
- Paying your bills and taxes
- Paying medical bills
- Managing your real estate
- Collecting retirement benefits
- Accessing your financial accounts
- Transferring assets as necessary
- Selling assets
- Operating your business
It's a common myth that your agent has the power to do whatever they want, but this isn't true. Not only do you have the right to limit what they do, but they are also required to act in your best interests.
When does it begin and end?
It's common to have concerns about when a durable financial power of attorney begins. For instance, you don't want someone to have this power when you're still able to make your own financial decisions.
A durable financial power of attorney typically goes into effect once it's signed, but you have the opportunity to make it a "springing" power of attorney, meaning your agent only gets power once you're incapacitated.
As for when it ends, a durable financial power of attorney stays in place until your death or until you're able to take over your finances after recovering.
You are not required by law to create a durable financial power of attorney, but doing so will give you peace of mind. You'll never again have to worry about something going wrong with your finances should you become incapacitated.
When the time comes to create a durable financial power of attorney, carefully answer these questions:
- Who will you name as your agent?
- What type of power do you want to give them?
- When do you want the power of attorney to begin?
Visit our website and blog for more information on creating a durable financial power of attorney, among a variety of other estate planning topics.