When estate planning, it's easy to spend most your time on what will happen to your assets upon your death. While this is a big part of your estate plan, there are other things to take into consideration.
For example, a financial power of attorney is the best way to allow another person, such as a family member, to manage your finances if you're incapacitated.
Not only does a financial power of attorney give you peace of mind, but it's also helpful to your family in the event of a serious injury or illness. With this in place, they don't have to worry about who is in charge of your finances.
When creating a financial power of attorney, there are two important questions to answer:
- Who will you name as your financial agent?
- What type of power will you grant your financial agent?
Don't make a rash decision when choosing an agent, as this person may end up responsible for many aspects of your finances. You must choose someone you can trust to make the right decisions on your behalf.
With that out of the way, turn your attention to deciding what this person can and can't do. Some of the tasks to consider including are as follows:
- Paying your bills and taxes
- Managing real estate
- Investing your money
- Buying insurance policies
- Collecting paychecks, retirement benefits and other forms of compensation
- Accessing your financial accounts
- Selling and transferring assets
- Hiring professional help, when necessary
Can a financial power of attorney do what they want, when they want?
Many people shy away from creating a financial power of attorney because they're concerned about abuse. They assume that their agent can do whatever they want.
This isn't true, as your agent is required to act in your best interests. Also, they must follow the terms and conditions outlined in the financial power of attorney.
You'll feel much better about your estate plan when you add a financial power of attorney. This gives you peace of mind in knowing that your finances will be in good hands should you be unable to manage them yourself.
Visit our website and read our past blog posts for additional estate planning guidance, including more information on creating a financial power of attorney.