As you consider how to ensure your wishes are known clearly and your financial affairs remain secure, it is often wise to consider assigning durable financial power of attorney to a person you trust.
Durable financial power of attorney grants a specific person the rights and authority to have access to your finances and make financial decisions on your behalf. It is easy to see how delicately you must consider who should have this power, especially if you have a considerable estate or a number of ongoing payments that you must keep up on a regular basis.
If you assign such power to an unscrupulous person, you may wake up some day to find your assets drained, for instance. On the other hand, a well meaning person without the proper organization and understanding of financial affairs may not manage your financial matters effectively, and may cause larger messes than he or she avoids.
The role of a financial agent
A person who holds financial power of attorney for you does the work of keeping your financial world in order. This may include:
- Paying recurring expenses and bills
- Paying ongoing debts
- Paying tax burdens
- Investing and managing assets
- Hiring individuals to perform specific services or represent you
- Collecting and managing income and benefits
- Considering and purchasing insurance
These are only broad categories of responsibilities a person may perform for you. Depending on the nature of your finances and length of time that person holds financial power of attorney for you, these duties may grow complex and time-consuming.
How durable should you make the assignment?
A person with durable financial power of attorney does not retain these privileges after you pass away. In fact, you may establish a financial power of attorney and remove it later on if your state improves and you may once again handle your own financial affairs.
In broad strokes, your power of attorney goes into effect when you sign it, unless you specifically wish otherwise and write the appropriate provision into the assignment. This is often referred to as a “springing” assignment, which only goes into effect when you suffer incapacitation.
Navigating tricky legal areas
When it comes to estate planning, security and efficiency are all in the details. Be mindful to understand the estate planning documents you choose to use and address your entire estate plan from time to time to ensure that you don’t miss out on important benefits and protections .