Many people focus their estate planning on what’s going to happen when they pass away. They don’t realize that there’s an entire component of estate planning that can help if they become incapacitated. One of the best tools available is a financial power of attorney (POA).
A financial power of attorney is a document that gives the appointed person the power to take care of your finances if you’re unable to due to incapacitation. The document is only valid if you’re still living. When you pass away, the power to make financial decisions for your estate transitions to the person who you name as the administrator.
What can the appointed person do with a POA?
The person you name as your financial power of attorney can do all of the things you’d normally do with your finances. They can pay your bills, make investments, sell assets and so on. Because of the scope of their abilities, you should ensure that you only appoint someone you fully trust.
The person you choose should be able to make financial decisions that are in your best interests. They shouldn’t ever do things that are based on what’s best for them. While some people choose to name a family member to hold this role, that isn’t the best decision for every situation — especially if you suspect it could lead to fighting within your family or other drama.
Working with an experienced attorney can often help clarify your needs and your options. If you haven’t considered creating a financial power of attorney document for your future, it may be time to start.