You’ve probably heard of the importance of having a Power of Attorney. Even though many of us know we need this document, many people don’t understand why we need it and what it actually does.
Don’t overlook the fact that you also need to consider what would happen if you were incapacitated and unable to make your own financial decisions.
Power of Attorney: The Definition You Need to Know
In legal terms, a Power of Attorney is the express, written authorization of one person that allows another person (their agent) to represent their interests in financial transactions, private business transactions and a variety of other legal scenarios.
Perhaps the best way to explain the Power of Attorney is to envision that the person you appoint as your agent steps into your shoes whenever they transact business as your agent.
How does it Work?
You will want to contact a California Estate Planning Attorney, ensuring that you take the required steps. We require our clients to nominate/designate people they would like to extend this power to. From there, you go through the process of completing the necessary documents.
Once complete, you will give one copy to your agent, who will want to keep this in a safe place.
Note: the person you choose to act as your financial power of attorney agent should be responsible and honest. Remember, this person will have access to your finances. You must be confident that he or she will make decisions based on your wishes and what’s best for you.
When Does a Financial Power of Attorney Turn On?
Just because you create a financial power of attorney does not mean that it will go into effect right away. Of course, you have the option for this to happen.
It all comes down to how the documents are drafted. You can opt for it to become effective immediately (Referred to in California as a California Statutory Power of Attorney). Or, you can opt for this to happen in the event of a future event, such as your incapacity.
Typically, clients don’t want their financial power of attorney to go into effect immediately. Instead, they only want this to happen as the result of their incapacity. This is known formally as a springing power of attorney, as it doesn’t “spring” into effect until a particular event occurs.
Responsibilities of an Agent
The nice thing about a financial power of attorney is that you can decide how much or how little your agent is able to do. This is all outlined in the document, so make sure you are clear as to the power you wish to grant.
Some of the things to consider include:
- Real estate transactions
- Tangible personal property transactions
- Bank account transactions
- Stock and bond transactions
- Commodity and option transactions
- The operation of a business
- Insurance and annuity transactions
- Personal and family maintenance
- Claims and litigation
- Retirement benefits
- Tax matters
- Making gifts to others, such as children and charities
As you can see, thought must be given when drafting these documents. You need to make a final determination as to what power you want to give your agent.
Don’t Wait Too Long
If you have reason to believe that a financial power of attorney could benefit you in some way, it’s a good idea to learn more about the finer details and benefits. Contact your Fremont Estate Planning Attorney of the Singh Law Firm to learn more.
Think of this: How many people do you know have suffered from strokes, dementia, etc. where they had been deemed incapacited – you never know when something bad could happen.
If you have questions about creating a financial power of attorney or California Estate Planning, you can reach out to our law firm for guidance and advice.