You may think that you only have to consider your assets when you’re creating an estate plan, but that’s not the case. One major part of an estate plan is setting up what should happen if you become incapacitated, which means you’re unable to make decisions about your own affairs.
If you’re incapacitated, your finances don’t stop needing attention. You’ll still have bills to pay and assets to manage. Naming a financial power of attorney is one option that you have for ensuring your finances will be taken care of if you can’t handle those duties yourself.
How does a financial power of attorney work?
A financial power of attorney allows you to legally appoint someone—called your agent or attorney-in-fact—to make financial decisions on your behalf. This can include managing bank accounts, paying bills, filing taxes, buying or selling property and overseeing investments. Essentially, your agent can step into your shoes to handle any financial task you’d normally manage yourself.
This document can take effect immediately, or it can be “springing,” which means it only goes into effect if you become incapacitated. That decision is up to you and is set when you create the document.
Setting up this document is only one part of creating a comprehensive estate plan. You must consider all your wishes and how you can legally convey those so they can be followed when you’re unable to speak up for yourself and after you pass away. Working with someone who can assist you may make this a less stressful process.
