When it comes to key estate planning documents, you can probably name some of the basics. There’s the will, of course—foundational to any estate planning effort. And there’s also the trust, which can help preserve assets and protect you against probate.
Another document for estate planners to be aware of is the financial power of attorney. While it’s not talked about quite as much, having a financial power of attorney document can strengthen your estate plan and bring you peace of mind.
What is a Power of Attorney?
Let’s start with some basic definitions. When we talk about a power of attorney, we’re talking about a legal document that gives someone else the legal authorization to act on your behalf, making decisions for you when you are unable to do so.
What is a Financial Power of Attorney?
When it comes to a financial power of attorney document, then, we’re discussing something slightly more specific—a form that allows another person to act on your behalf in financial matters, whether it’s paying bills, authorizing stock trades, etc.
When is a Financial Power of Attorney Form Invoked?
A power of attorney for financial matters may be invoked either immediately (that is, once the legal papers are formalized) or at a later date.
You may decide to make your power of attorney effective immediately, even if you are still very healthy and not at all incapacitated. For example, maybe you’re going to be out of town and need your spouse or a close friend to sign off on a financial transaction for you.
More often, however, these documents go into effect only when the individual becomes medically incapacitated—unable to make financial decisions on their own. Mental illness, dementia, and falling into a coma all qualify here.
When is a Financial Power of Attorney Ended?
A power of attorney for financial matters typically ends when the principal dies—though there are some circumstances under which it may end sooner. A court may revoke your power of attorney if it is found to be invalid somehow, though working with a lawyer can usually help you avoid this. Additionally, you can choose to nullify it if you feel the agent you selected is no longer fit to serve. For example, it’s common to name one’s spouse as the agent—but upon divorce, you may wish to find someone else.
What are the Qualifications for Serving as an Agent?
You can choose almost anyone to be your agent—so long as that person is of sound mind and is at least 18 years old. It goes without saying that you want your agent to be someone you trust, someone you know to be responsible, and someone with whom you can talk candidly about your wishes.
What are the Advantages of Having a Financial Power of Attorney?
The reason we recommend having a financial power of attorney is that you never know what the future holds—and an accident or injury may leave you unable to make important financial decisions for yourself and for your family. Choosing a trustworthy agent can give you peace of mind, and help you prepare for all contingencies.
If you have questions or are ready to fill out a financial power of attorney form, we invite you to contact Singh Law Firm. This is one of the areas we serve in, providing expertise to those looking for robust estate planning. Connect with us today to learn more.
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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.
