The end of a person’s life does not always come quickly. Some people spend days, weeks, months or even years in a poor mental or physical state before they actually die.
During that liminal period when someone is incapacitated but still living, bills still have to be paid and other financial matters need to be handled. Once someone dies, their estate will be handled by their named executor or personal representative. Before that time, however, a power of attorney may be needed.
A financial power of attorney can take several forms
Giving someone power of attorney can provide much-needed access to your financial resources. What exactly a POA allows the designated agent to do will depend on how you set the power of attorney document up. Some people restrict the power of attorney to just one activity or account, while others give their agents more sweeping powers.
Springing powers of attorney are one option. These mean the agent has no authority until doctors sign to say you are incapable of making decisions yourself due to your poor cognitive state. While useful, there is also a real risk that waiting until you reach this point could cause considerable financial problems for you and your loved ones.
Durable powers of attorney are another option. Many people give their spouse or their adult child their durable power of attorney, so their chosen agent can step in and handle their finances the moment they cannot do so themselves. Complete trust in the agent is even more critical here, as unlike the springing power of attorney, a doctor’s signature is not needed to activate it.
Learning more about the various options is wise if you wish your estate plan to better account for the range of scenarios that could occur.
