How Does a Financial Power of Attorney Work?

The estate planning process provides many ways for you to plan for the future, and to mitigate life’s uncertainty. For example, none of us ever plan on being medically incapacitated, or of slipping into a coma or a vegetative state. And yet, these things can happen to anyone, whether due to illness, injury, or accident. The estate planning process offers a number of documents you can use to prepare for these contingencies. And one of the most essential is the financial Power of Attorney.

But how does this document work, exactly? Here’s a quick guide.

Power of Attorney 101

To begin with, a Power of Attorney is any legal document that appoints another person (say, a friend or family member) to be your legal representative, and to make decisions for you when you are unable to make them for yourself. For instance, working with a Power of Attorney lawyer, you can draft a document that goes into effect any time you become medically incapacitated. In other words, this document will confer legal decision-making powers to the person you’ve named as your appointee. The document will only be effective for as long as you are unconscious or unable to speak for yourself.

Different Types of Power of Attorney

When you meet with your Power of Attorney lawyer, you’ll learn more about the different types of Powers of Attorney that exist.

For our purposes today, we’re focusing on the financial Power of Attorney. This document allows you to name someone to serve as your representative in business or financial decisions, should you be unable to make those decisions on your own.

There are countless examples of what a financial Power of Attorney empowers someone to do, but a few examples include:

  • Buying and selling real estate on your behalf
  • Buying or selling businesses in your name
  • Filing and paying your income taxes
  • Paying bills in your name
  • Making decisions about your investment portfolio, including buying stocks and bonds on your behalf
  • Managing funds in your retirement accounts, such as IRAs

What About Medical Powers of Attorney?

A financial Power of Attorney can be valuable, but you may also wish to consider a medical Power of Attorney. This document works in much the same way as a Financial Power of Attorney, only instead of appointing someone to make decisions about your business needs, it appoints someone to make decisions about your medical care. For example, you can name someone to make decisions about if and when you receive breathing tubes and other life support treatments.

This is not to be confused with an advanced health care directive, which is an estate planning document in which you can outline your wishes for end-of-life care, ensuring there is no confusion about your values and preferences.

All of these estate planning documents can provide you with peace of mind about your future, and they can also prevent any uncertainty or infighting amongst your loved ones. Make sure you talk with a directive power of attorney expert to learn more about these different options.

Talk with a Directive Power of Attorney Expert from Singh Law Firm

As you consider your options for estate planning, including possibly having a durable Power of Attorney in place, we welcome you to contact Singh Law Firm. Our lawyers have ample experience handling complex estate planning needs for clients throughout the Fremont area.

We would love to sit down for a consultation to hear more about your needs and goals. To make an appointment with Singh Law Firm, contact our office at any time.

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