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What is a financial power of attorney?

On Behalf of | Aug 2, 2021 | Estate Planning |

There are multiple kinds of power of attorney, but one that you should consider adding to your estate plan is a financial power of attorney. This POA is a legal document included in your estate plan that gives someone you trust the power to act on your behalf in financial matters.

A financial power of attorney is an important legal document. This document will let someone you know take over your bank accounts and other financial items to make sure you are paying bills on time, getting paid as you should be (if you receive payments) and they will handle financial decisions on your behalf.

Why create a specific financial power of attorney?

When you set up a power of attorney, you can make the POA as broad or restrictive as you would like. This is because the POA can grant the agent the power to make decisions about more than just finances. Power of attorney documents can be used for medical decisions, property decisions and financial decisions. Setting up separate POAs can be beneficial, especially if there are several people you know who would fill those roles well.

Your financial power of attorney gives someone the power to help

Your financial power of attorney gives another person in your life the ability to step in and help you when you cannot manage on your own. For example, if you’re involved in an automobile accident and cannot handle your finances because of a brain injury, then the POA could kick in and allow your sibling, friend, parent or other party to manage your finances on your behalf. Similarly, if you develop Alzheimer’s disease or another condition that affects your memory and ability to monitor your finances, then a POA could be helpful.

Setting up a POA early in life is a good idea because you never know if you’ll suddenly become incapacitated or affected in ways that make it impossible for you to take care of your financial matters. Taking this step now is a good way to help yourself rest easy knowing that you’ll be supported if you are ever incapacitated. It also gives you time to talk to others and to decide who would best fit this role.

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