With certain estate planning documents, you can name someone to serve as your legal representative, empowering them to make important decisions on your behalf should you ever be unable to make those decisions on your own. Generally, these documents go into effect in the event of medical incapacitation or the loss of cognitive ability.
One of the most common examples of these documents is the durable power of attorney. Specifically, you can use a financial power of attorney to equip your legal representative with certain rights and privileges. The question is, what exactly are the rights associated with a financial power of attorney?
About the Durable Power of Attorney
First, it’s important to lay the foundation. When you choose to include a power of attorney document in your estate plan, you are presented with two basic options: A health care power of attorney or a financial power of attorney.
When you choose a health care power of attorney, you are naming an individual who can make decisions on your behalf, regarding the medical treatments you receive. Again, this power goes into effect only if you are cognitively impaired, in a coma, or otherwise unable to voice your own wishes and preferences.
A financial power of attorney works in much the same way… only instead of making decisions about your medical treatment, your representative will make decisions about your business, personal finances, investment accounts, etc.
Understanding the Rights of a Financial Power of Attorney
Now we come to the core of the matter: When you choose someone as your financial power of attorney, exactly what rights are you ascribing to that person?
A power of attorney lawyer can answer this question in greater detail. Basically, though, the financial power of attorney agent you appoint can help you handle all of your personal tax-, business-, or money-related needs. Some examples of what a financial power of attorney agent can do include:
- Use your assets to pay off everyday expenses or bills
- Buy, sell, or pay taxes on property on your behalf
- Collect government benefits on your behalf (e.g., Social Security)
- Invest your money in stock, bonds, etc.
- Handle transactions involving your personal bank accounts
- Buy or sell annuities or insurance policies on your behalf
- File and pay your taxes
- Transfer property to a trust in your name
- Manage your investment accounts, retirement accounts, etc.
- Make financial decisions regarding your small business, including the decision to sell it
As your power of attorney lawyer will explain to you, this long list of rights also comes with some important responsibilities. For instance, when someone is acting as your financial power of attorney, the law requires them to:
- Always act in your best financial interests
- Keep accurate and thorough records
- Keep their own, personal property separate from yours
- Avoid any potential conflicts of interest
Given the burden of these responsibilities, one of the most critical steps in estate planning is selecting the right person to serve as your financial power of attorney agent. This is another area where advice from your estate planning lawyer can be indispensable.
Learn More About Estate Planning
If you have any additional questions about using a power of attorney, or about estate planning in general, we welcome you to contact Singh Law Firm.
As experts in advanced estate planning, we are happy to clear up any directive power of attorney questions you are facing. Additionally, we can help you get your own estate planning documents in place.
To find out more about estate planning, please make an appointment with the Singh Law Firm team at your next opportunity.