What is a Financial Power of Attorney and How Does it Work?

Estate planning is often about expecting the unexpected, creating strategies and solutions to deal with seemingly remote or unlikely possibilities. For example, what happens if you ever become medically incapacitated, unable to speak or to make decisions for yourself? While this may seem like a distant contingency, it’s very possible, and it’s something everyone should prepare for.

Estate planning lawyers can provide a number of tools for dealing with this scenario, including the financial power of attorney. For those who are unfamiliar with this estate planning document, allow us to offer a quick explanation.

What is a Financial Power of Attorney?

A financial power of attorney is a legal document that allows you to appoint another person to act as your representative, should you become medically incapacitated and unable to make your own decisions.

Specifically, a financial power of attorney appoints someone to act as your representative in matters related to business, personal finance, or taxes.

Should you fall into a coma or a similar condition, the financial power of attorney will become effective, allowing your representative to act on your behalf. If you regain cognizance, the durable power of attorney will lose its effect.

How Does a Financial Power of Attorney Work?

There are a number of legal responsibilities you can appoint unto someone else with the use of a durable power of attorney. A few examples include:

  • Making decisions about the small business that you own
  • Filing your income tax returns
  • Paying your bills and your debts
  • Completing real estate transactions on your behalf
  • Making decisions about your investment accounts

This isn’t a comprehensive list, but does suggest a few of the ways in which a power of attorney can ensure that key financial and business decisions are not neglected, even if you experience a health crisis.

Are There Other Kinds of Power of Attorney?

When you meet with a power of attorney lawyer, you might ask about the different kinds of documents that are available. For instance, in addition to a financial power of attorney, you may also want to learn more about 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 financial decisions for you, you can appoint someone to make healthcare decisions in your stead. These might include decisions about if or when to remove life support systems.

Again, a power of attorney lawyer can answer any questions you might have about these different documents.

Who Needs a Power of Attorney?

A final question: Should you meet with our team of estate planning lawyers to talk about establishing a financial power of attorney?

Generally speaking, we think it’s wise for everyone to think about their end-of-life wishes, and about what might happen should they experience a medical catastrophe. There are a number of ways to do that, including such documents as advance health care directives, medical powers of attorney, and financial powers of attorney.

An estate planning lawyer can walk you through the different options and help you select the estate planning strategy that makes the most sense for you and your loved ones.

Contact Singh Law Firm

If you’re ready to have that discussion about end-of-life and estate planning, and to start expecting the unexpected, we welcome you to call us. Singh Law Firm provides estate planning guidance and expertise to families throughout Fremont and the surrounding area. We’d love to answer your power of attorney questions. Connect with us whenever you’re ready to have a chat.

Leave a Comment