What Is a Financial Power of Attorney?

Are you in the process of creating an estate plan? Are you focusing most of your time on the best way to leave your assets behind upon your death?

While it’s important to focus on your assets and whom to name as your beneficiary (or beneficiaries), don’t lose sight of the many other things that go into creating a comprehensive estate plan.

For example, most people come to find that a financial power of attorney provides them with the peace of mind they’ve been looking for.

In short, this is a legal document that allows another person to manage your finances if you are incapacitated and unable to make decisions on your own.

Without a financial power of attorney in place, it’s possible that the wrong person could be staffed with the responsibility of making financial decisions on your behalf.

While you have the right to set limits in regard to what your agent can do, some of the responsibilities to consider including are as follows:

  • Paying your bills and taxes
  • Managing your investments
  • Managing your real estate
  • Paying medical expenses
  • Investing on your behalf
  • Accessing financial accounts, such as bank and retirement accounts
  • Operating your business
  • Selling and transferring assets as necessary
  • Collecting retirement benefits on your behalf

It’s important to remember that your agent is not able to do whatever he or she decides on. Instead, this financial professional needs to follow the terms and conditions of the financial power of attorney, while also acting in your best interest.

When it comes time to name an agent you need to think about who makes the most sense. For some people the answer is simple: their spouse or an adult child.

Others, however, come to find that they don’t have a spouse or adult child who can take on the responsibility. At that point, you need to consider if an extended family member or close friend is willing to agree.

Tip: Don’t name a person as the agent or your financial power of attorney until you first ask his or her permission.

With so many benefits it’s a good idea to learn more about creating a financial power of attorney. Once you know the process of creating this document, you may look back and wonder what took you so long.

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