If you have accumulated valuable assets and achieved financial stability in your later years, you undoubtedly have made a lot of good decisions along the way. But what if you were no longer able to make smart choices or decisions by yourself? Where would you turn for trusted advice when critical decisions needed to be made about your business affairs or personal finances?
Unfortunately, many older adults find themselves at that point, often without having made proper allowances to protect themselves. A simple legal agreement, known as a Power of Attorney (POA), can make that process much easier and safer when the time comes.
A Power of Attorney document is a written authorization which allows you, as the named principal, to formally appoint a trusted individual to make decisions and take actions for you. The premise of a Power of Attorney is that if you become physically or mentally incapacitated, either temporarily or permanently, your loyal surrogate could step in for you and represent your best interests.
The person you select — usually a spouse, adult child, other relative, or close friend — is then designated as your agent or “attorney-in-fact” within the scope of the agreement. That means they will be expected to make informed, good-faith decisions on your behalf, ideally representing what they sincerely believe would be the way you want thinks handled.
There are many types of Power of Attorney agreements, all of which are customized to each client’s particular situation and priorities. In the most general terms, Power of Attorney documents typically fit into two broad areas: financial Power of Attorney and health care Power of Attorney.
Financial Power of Attorney agreements
When establishing a POA, it is up to you, as the principal, to determine which powers your assigned agent (or agents) will have. A financial Power of Attorney, as its name implies, authorizes your designated trustee to make decisions involving your finances and business dealings. Those decisions can cover a wide range of vital responsibilities, such as buying or selling assets, managing real estate transactions, handling insurance policies, transferring funds, compiling tax returns, or many other legal/financial matters.
As the principal of your POA, you can choose to revoke or change the terms of your Power of Attorney at any time. However, some financial Power of Attorney documents are known as a durable Power of Attorney. A durable POA is one which seamlessly remains in effect if the principal becomes mentally or physically incapacitated. Because such an arrangement ensures that the principal’s affairs will be handled as he or she would have wanted, durable powers of attorney are very popular.
There also are POAs defined as limited Power of Attorney or “special” POA documents. These are agreements which specify that your designated agent will only have authority over certain selected aspects of your financial responsibilities, such as selling a piece of real estate or maintaining a safe-deposit box.
When creating any Power of Attorney, carefully choose the person — or people — you will trust to make decisions about your assets and affairs when the time comes. Then consider which specific responsibilities your agent(s) will have. Once your POA is written, you also should revisit the documents regularly to make sure they still reflect your wishes.
Trust an experienced professional estate planner
A Power of Attorney document provides great peace of mind. It assures you that everything you have worked for during your life will continue to be managed according to your wishes, even if you are unable to handle the decision-making yourself.
Power of Attorney responsibilities also should be part of your larger estate planning strategy. Without a POA, your assets and personal dealings could end up being managed by a court-appointed representative who knows nothing about your intentions. Avoiding those judicial proceedings also can save your estate a good amount of money in probate costs.
The experienced attorneys at Cordell Planning Partners will help you design a Power of Attorney agreement to address whatever issues and concerns you are facing. Our attorneys are able to craft smart, customized solutions to help protect your assets for the future.
Cordell Planning Partners also offers free educational workshops where we explain a range of estate plan options and asset protection programs, all in terms that are easy to understand.
To learn more, contact us today. You can even schedule a complimentary estate plan analysis to discuss your individual planning priorities.