A power of attorney can be a vital part of a financial plan. If you lose the ability to manage your own finances, you could make costly mistakes or be victimized by con artists. A power of attorney can provide some protection.
* When you give someone the power to act on your behalf, you’re the principal.
* The person you name to handle your affairs finances may be known as your agent or the attorney-in-fact.
Those roles are common to all types of powers. There are different types of powers, though:
* A durable power of attorney stays in effect even if you become incompetent. That’s not true for regular powers.
* If you are reluctant to create a durable power now, you might prefer a springing power of attorney. This document won’t take effect until the occurrence of events you’ve specified. A springing power might become effective, for example, if two doctors state–in writing–that you are not able to implement sound decisions about your finances.
With either type of power, someone you have named will handle your assets if you can’t do so.
However, even if state law says that power of attorney must be recognized, some financial firms may reject the power if it’s not on the firm’s own form. When you create a power of attorney, try to address such problems in advance. Contact the banks and investment companies where you have accounts and see if they’ll accept a power of attorney you’ve created or if they require their own form. Then you can fill out powers of attorney specifically for the firms that want their own forms.
Of course, the agent you name should be someone you trust absolutely. Assuming that’s true, you also can register for online transactions with your financial firms and tell your agent where to find your passwords and PIN numbers. Then, if you are incapacitated, your agent will have access to your accounts, even if the firm won’t accept a power of attorney.