Planning your current finances is a challenging enough task without you having to worry about what will happen if you are unable to do so in the future. In order to protect yourself and gain peace of mind, you should make arrangements to grant someone you trust the power of attorney for your money and assets. If you’re not sure where to start, here are answers to all your questions about financial powers of attorney.
When you would need power of attorney
There are several types of powers of attorney that you can grant to a designated person. Ordinary power of attorney is an arrangement that you can make while you still have the ability to make your own decisions but you would prefer to have someone else do it. Ordinary power of attorney allows you to be informed of how your money and your assets are handled, and you may set limits for the power that your attorney has. In fact, an ordinary power of attorney agreement is only valid while you can still make your own decisions.
By contrast, you can set up a lasting power of attorney, which would be valid when you aren’t able to make your own decisions. It’s easy to not think of how you would make financial arrangements in the event that you are mentally incapacitated, but if you arrange for this kind of power of attorney for unforeseen situations, it could lead to a drastically different outcome concerning your assets. You could find yourself in need of an attorney if you are involved in a serious accident, such as a road accident or work accident. You could also lose your ability to make financial decisions as a result of a medical emergency like a stroke or the onset of dementia.
How to choose your financial power of attorney
Ideally, when you choose someone to take care of your finances in case you are not able to, you’ll want to choose a person whom you know well and who has sound financial judgment. While many people opt to give a relative power of attorney, this isn’t the only option. In fact, your attorney-in-fact could be a close friend or a professional, such as a solicitor whom you have worked with before.
One important stipulation to keep in mind when you are considering who should be your attorney-in-fact is that the person must not be financially bankrupt at the time. He or she should exhibit sound financial judgment and have no extenuating circumstances that could impede decision-making.
Financial access for attorneys
An attorney that has control of your finances may be able to buy or sell property on your behalf, as well as maintain any property that you currently have. This responsibility is most often used for paying bills such as the mortgage and overseeing investments in your name. Your attorney may also give your financial information to other parties as he or she finds it necessary. It is important to know, however, that you can require your attorney to update you regularly on the state of your finances and any changes that have been implemented.
When you think of a power of attorney for your finances, consider it an investment in your financial well being. Making a smart decision now could put you in a better position in the future, no matter what happens.