By Marie R. Tarbox, JD, Vice President & Trust Officer
When people think about estate planning, they often think of it in terms of having a Will or a Trust, directing disposition of property on their death. There are, however, important estate planning tools that are critical during your lifetime. These tools are powers of attorney. There are generally two types of powers of attorney – the power of attorney for finances and the power of attorney for health care decisions. Today we focus on the power of attorney for finances.
With a power of attorney, you (the principal) name who you want to manage your financial affairs if you are unable to do so. The person you name is known as your agent or your attorney-in-fact. The power of attorney may be limited in nature, perhaps to handle a specific matter, such as a real estate closing, or it may be general, to manage all of your financial affairs. Powers of attorney may become effective on a specified future event, such as incapacity, or they may be effective from the moment of signing, and continue regardless of subsequent incapacity or disability. Powers that continue in effect after incapacity or disability known as durable powers of attorney.
Why is a power of attorney a good idea? Sometimes it is simply the convenience of having someone else act on your behalf when you are unable to do so yourself. More importantly, though, a power of attorney is the document that ensures that you are the person who determines who will act on your behalf if you are incapacitated or disabled, whether temporarily or permanently. If you become incapacitated or disabled and do not have a power of attorney in place, court proceedings will be required before someone can act on your behalf. The person who is appointed to act for you by the court may not be the person you would select, and the powers granted may not be the same as you would grant.
A power of attorney is recommended for anyone who is of legal age. Even if your accumulated assets are smaller, having a power of attorney means that your chosen person will be the person who takes care of your financial matters for you. It also means that things will be managed in a more efficient manner than through a court proceedings.
The need for a power of attorney may only be an accident or an illness away. Accidents and illnesses can happen to anyone regardless of health or wealth. Again, your power of attorney is a critical estate planning tool that affect use of your finances during your lifetime.
Contact Marie: 563.388.2631