What is a Financial Power of Attorney?
Ever heard the term, power of attorney? You may be familiar with this phrase when used in a medical situation, but may not know that there is such a thing as a financial power of attorney. Find out what a financial power of attorney is and whether it makes sense for you.
What does power of attorney mean?
In the legal world, power of attorney (POA) is a document that gives another person the legal authority to act on your behalf. The individual you name in your POA is sometimes called your "attorney-in-fact." Having a power of attorney can be helpful in a number of situations. For example, if you're going to be out of the country and need someone to handle financial matters on your behalf, naming a power of attorney can give that person the legal authority to do so. Power of attorney is also beneficial in a situation where you become medically incapacitated and are unable to make decisions for yourself.
What does financial power of attorney mean?
A financial power of attorney is a legal document that gives someone else the authority to make financial decisions on your behalf. This can include managing bank accounts, investing money, paying bills, and more.
The person you appoint to handle your finances is known as your “attorney-in-fact” or “agent.” You can appoint more than one agent, but it’s important to choose someone you trust implicitly. This person should be organized and responsible and should have your best interests at heart. You can give your financial power of attorney to anyone you choose, but it’s often a spouse, child, or other close relative. You can also appoint a professional fiduciary, such as a financial planner or accountant.
What are the benefits of having a financial power of attorney?
There are many benefits to having a financial power of attorney. Perhaps the most important benefit is that it gives you peace of mind knowing that your financial affairs will be taken care of if you become unable to do so yourself.
A financial power of attorney can also save your loved ones from having to go through the lengthy and expensive process of obtaining a conservatorship or guardianship if you become incapacitated. And, because you get to choose who will handle your financial affairs, you can be confident that your finances are in good hands.
Can anyone have power of attorney?
Most financial institutions require that the person you name as your attorney-in-fact be over the age of 18 and have a clean financial history. Additionally, some financial institutions may require that your attorney-in-fact live in the same state as you.
You can name anyone you trust as your attorney-in-fact, but it's important to choose someone who is responsible and organized. This person will have a great deal of control over your financial affairs, so it's crucial that you pick someone you can rely on.
Can you have multiple power of attorneys?
Yes, you can have more than one financial power of attorney. You might name different people to handle different aspects of your finances, or you may name someone as a backup in case your first choice is unavailable.
It's important to note that financial power of attorney is different from medical power of attorney. Financial power of attorney gives another person the authority to make financial decisions on your behalf, while medical power of attorney gives someone the authority to make healthcare decisions for you if you're unable to do so.
You can name the same person to handle both financial and medical power of attorney, or you can choose to have two different people for each.
Can financial power of attorney be taken away?
Yes, you can revoke a financial power of attorney at any time, as long as you’re mentally competent to do so. To revoke the document, simply fill out a revocation form and notify your agent. You should also notify any financial institutions where your agent has been given authority to act on your behalf. It’s also important to note that a financial power of attorney is automatically revoked if you become incapacitated or die.
What is the difference between durable power of attorney for finances and non-durable?
A durable power of attorney for finances is a financial power of attorney that remains in effect even if you become incapacitated. This type of power of attorney is often used to appoint someone to manage your financial affairs if you become unable to do so yourself.
A financial power of attorney can be either “durable” or “non-durable.” A durable power of attorney remains in effect if you become incapacitated, while a non-durable power of attorney does not. If you become incapacitated or pass away, a non-durable power of attorney is forfeit.
How do I designate someone as my financial power of attorney?
The process for designating someone as your financial power of attorney varies from state to state. In most cases, you'll need to fill out a financial power of attorney form and have it signed by a notary public.
Once the form is complete, you'll need to give a copy to the person you're naming as your financial power of attorney. You should also keep a copy for yourself and give copies to any financial institutions where your financial power of attorney will be used.
When does a financial power of attorney become effective?
A financial power of attorney usually becomes effective as soon as it's signed. However, you can also specify that the power of attorney only becomes effective if or when you become incapacitated. You can also designate that the power of attorney only becomes effective after a future event.
Is it required to have a financial power of attorney?
No, financial power of attorney is not required by law. However, it can be a useful tool to have in place in case you become incapacitated or otherwise unable to manage your financial affairs.
Want to be prepared for end-of-life logistics? Need a way to keep information organized for your loved ones? Visit Ever Loved's key information checklist and help your family feel prepared when the time comes.