There are many reasons to create a power of attorney, and you must become familiar with all of them before you head down this path.
The primary benefit is the opportunity to name someone, an agent, to manage your finances if you’re incapacitated and unable to do so. For example, if you’re seriously injured in a motor vehicle accident, your agent may need to step in and manage your finances until you’re hopefully able to do so again.
There are two important questions to answer as you create a financial power of attorney:
- Who will you name as your agent?
- What types of responsibilities will you give your agent?
You can name almost anyone as your financial power of attorney agent, but that doesn’t mean you should rush your decision. You should trust this person to always do what’s in your best interest. Furthermore, it doesn’t hurt if they’re on solid financial ground.
In regard to the responsibilities of your agent, it’s up to you to decide on what they will and won’t be able to do should the time come. Some of the things you may ask your agent to do include:
- Pay your medical expenses
- Maintain insurance coverage
- Paying your bills and taxes
- Invest on your behalf
- Manage real estate, such as your family home and investment property
- Collect retirement benefits
- Manage retirement and bank accounts
- Sell assets as necessary
Remember this: Your financial power of attorney agent doesn’t have the ability to do whatever they want. They must follow the terms and conditions of your financial power of attorney, while also acting in your best interests. Failure to do so can make them personally liable for losses.
It doesn’t matter how old you are, you can add a financial power of attorney to your estate plan. You hope that your agent never has to step in, but it’s nice to know that they’re able to do so if you become incapacitated.
With so many benefits and no drawbacks, it makes good sense for anyone with an estate plan to create a financial power of attorney. It’s not a decision you’ll regret.