Retirement & Financial Planning Report

Although you might not want to think about it, as you grow older there’s a chance that you could lose the ability to manage your own affairs. If that happens, you might make bad investments, fall victim to a scam, or lose vital services because your bills weren’t paid. To guard against this, you can create a durable power of attorney.

This document appoints one or more competent adult individuals (the “agent” or agents) to act on your behalf. The named agent can perform any legal task that you have the right to do, such as sign checks, gain access to a safe deposit box, collect Social Security, file tax returns, and so on. A “durable” power is different from other powers of attorney in that it continues to be valid even if you, the “principal,” become incapacitated.

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If you want to prepare such a durable power of attorney but you do not want the agent’s authority to take effect until you become incapacitated, you can create a springing power of attorney. This type of power becomes effective only upon certain events. You might specify, for example, that two doctors must certify in writing that you are incompetent.