One of the most important documents in your estate planning portfolio is a Durable Power of Attorney. This document allows an individual to name someone to handle all of their financial decisions if they are ever unable to make them for themselves.
It is a common misconception that a spouse or child will automatically step up and take care of their finances if an accident or illness leaves them incapacitated. However, there are only two ways to obtain the legal authority to handle the finances of another. The first is by petitioning the court for the right to act on behalf of a loved one. The second and much simpler option is to create and sign a durable power of attorney before capacity is lost.
The person creating the power of attorney gives the agent broad and sweeping power to handle their financial affairs. If incapacitation occurs, the agent will be making all decisions concerning property and money. For example, the agent can sell property, spend money and invest as needed.
With so much at stake there is a lot to take into consideration before signing a Durable Power of Attorney. For example, you can limit the agent’s powers by creating a limited power of attorney.
Most importantly you should select an agent who you trust. Before you give them such broad power over your finances, you should talk with your family and choose a trustworthy, responsible and organized agent.
While a Durable Power of Attorney can be revoked while you are still of sound mind, it is best to select a worthy agent the first time so that you will not have to go through any hassle and expense of revoking the document and creating a new one.