A Durable Financial Power of Attorney (POA) is a very important legal instrument that gives someone else legal authority over your finances and other assets. (A Healthcare Power of Attorney is a separate document that gives someone the authority to make medical decisions for you). The language of a POA can be daunting, but it can be one of the most important financial decisions that you make. Getting one set up before you need it can ensure that your assets are protected if you become unable to handle them, without the necessity of your family going to court to get a guardianship over you. Here are some common questions that you might have about the Durable Financial Power of Attorney so that you’re ready to make an informed decision about this important document.
What Kinds of Things Can Power of Attorney Address?
A Financial Power of Attorney can authorize a trusted agent to make decisions regarding your finances, real estate, investments, and other assets. It allows your agent to conduct banking transactions, claim property that you have inherited, attend to tax and retirement-related matters, invest, and take care of your day-to-day expenses. The extent of their power is entirely determined by the language and nature of the POA, which you determine in advance.
Can a Living Trust Replace a POA?
Only to a limited extent. When you create a revocable living trust, you place your property into the trust, which will be handled by an appointed trustee in the event that you are incapacitated or die. Though a Trust can be used in a similar way as a POA, it is not the same. For one thing, any property that is not included the trust cannot be accessed or handled by your trustee. Additionally, a living trust cannot address medical matters—that is done by your Healthcare Power of Attorney.
Do I Lose the Ability to Make Legal/Financial Decisions When I Sign a Financial POA?
You do not. You can direct that your POA is only effective when you are determined to be incompetent or incapacitated. Even if you decide to make your POA immediately effective, although your agent can act without your permission, you will still be able to make decisions on your own behalf and instruct your agent to take actions or no action. If your agent is not complying with your wishes and is making decisions you don’t want while you are still competent, you can revoke their power. It is important to pick someone you trust, decide when your POA becomes effective, and keep an eye on your finances (if you are still competent), to ensure that your agent is acting as you wish.
Do You Need Help Understanding Power of Attorney?
If you have more questions about Power of Attorney or any other aspect of estate planning, we can help you. DK Rus Law has a long history of experience in all matters of estate planning including Wills, Trusts and Financial and Healthcare Powers of Attorney. Contact us today so that we can answer your questions and come up with a suitable Estate plan for your needs.