If you become ill or injured, a power of attorney will be extremely valuable. This document is drafted by you, the “principal.” It gives someone else, your “agent,” the ability to manage your financial affairs. Thus, if you are incapacitated, your agent can use this power to pay your bills, handle your investment portfolio, and so on. Accordingly, your agent should be someone you trust absolutely.
All powers of attorney are not the same:
* A “general” or “ordinary” power might be used for a specific purpose. If you are selling your house and don’t want to be at the closing, you can give such a power to another person, who can sign the necessary documents. However, an ordinary power won’t remain in effective if you become incompetent.
* A “durable” power will retain its effectiveness even after you’re incapacitated. Such a power, with that label, should be part of your estate plan.
Make sure that any power of attorney form you sign conforms to your state’s law.