When you set up a financial power of attorney, you appoint a trusted individual to make financial decisions on your behalf in the event of incapacitation. That being said, there is no “one size fits all” power of attorney plan. You can determine what issues your power of attorney can handle, and when their authority can kick in. What should you know about financial power of attorney?
What will your financial power of attorney take care of?
Your power of attorney takes care of all matters dealing with your financial matters. This encompasses a wide-range of tasks including: paying bills, managing financial accounts, making investments, managing your assets and purchasing insurance. Whenever they act on your behalf, your power of attorney is required to act in your best interests.
Your power of attorney is also able to handle asset preservation planning on your behalf. However, a 2004 New Jersey law requires that asset preservation planning is specifically authorized within your power of attorney document. If your power of attorney document was written before 2004, you may want to contact an attorney to update your current plan. Asset preservation planning is important for protecting your assets if you end up in an assisted living or nursing care facility that could otherwise drain your assets.
Can you limit your power of attorney’s control?
You are able to decide how much power you would like to grant your power of attorney. However, the goal of a power of attorney document is to appoint someone to take care of your financial affairs once you are no longer able to. In most cases, you will not want to limit your power of attorney’s abilities to take care of your financial matters.
If you would like to remain in control of your financial decisions up until the point of possible incapacitation, you can create a “springing” power of attorney. In this instance, their power of attorney only kicks in if you become incapacitated, and not when you sign the document.
Can they make decisions outside of financial matters?
You can also appoint a power of attorney to take care of your healthcare matters. This can be the same person taking care of your finances, or you can appoint a different power of attorney who only focuses on healthcare.
Determining a power of attorney may not seem pressing while you are in good mental and physical health. But it is important to determine who will take care of your important decisions in the event that you become incapacitated. Speak with an attorney who can answer your questions, and help you set up a power of attorney plan that works for you.