When creating an estate plan, you’ll have many questions and concerns about your finances. With the help of a durable financial power of attorney, you can provide yourself with peace of mind.
Through the creation of a durable financial power of attorney, you allow another individual to manage your finances if you’re unable to do so, such as the result of incapacitation.
If you’re interested in creating a durable financial power of attorney, the first thing you need to think about is the person you’ll name as your agent. Since they may have to take on many responsibilities in the future, they should be honest, trustworthy and in good financial standing.
As you create this document, you can set limits as to what your agent can and can’t do should the time come for them to take over. Some of the tasks you may want your agent to handle include:
- Paying your taxes and bills
- Managing your bank accounts
- Managing your retirement funds, including retirement accounts and pensions
- Investing on your behalf
- Paying medical expenses
- Managing your real estate
- Buying and maintain insurance on your behalf
- Collecting paychecks and/or retirements benefits
- Managing your business
Many people are scared to create a durable financial power of attorney because they don’t want someone else in charge of their finances. But remember, you can outline the tasks your agent will handle. Furthermore, they’re required to make decisions that are in your best interest.
With a durable financial power of attorney, it goes into effect upon creation. Then, if you’re incapacitated, your agent can step in and manage your affairs as outlined in the document.
With regard to when it ends, you have the legal right to cancel your durable financial power of attorney at any time. Also, if you pass away, it’s automatically invalidated.
You don’t have to add a durable financial power of attorney to your estate plan, but with so many benefits it’s a good idea. Not only does it give you peace of mind that the right person will manage your finances if you become incapacitated, but it also protects against the court making this decision on your behalf.