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.
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.
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.
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.
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.
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.
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.