Retirement & Financial Planning Report

A power of attorney can be invaluable. For example, you might suffer a stroke with no prior warning signals and be unable to sign your name, which might have had serious financial consequences. Executing a power of attorney can protect you in such an eventuality.

Therefore, most people should have a power of attorney. You can name more than one party, specifying whether they can act singly or if they must act in concert. For example, you might nominate both of your children as “attorneys-in-fact,” stating that they must agree in order to act on your behalf.

Naturally, the person you name must be someone you trust fully. Usually, this means a close–and younger–family member. If you wish, you can assign different responsibilities to different people. You may name your spouse to make your housing decisions, for example, and your son to manage all your financial affairs.

You may not want to give power over your assets to a family member while you’re still in command of your faculties. To address such concerns, springing powers of attorney are recognized in many states. These powers won’t become effective until specified events take place, such as incompetency (certified by a doctor) or entry into a nursing home.

What if your state doesn’t recognize springing powers? You often can achieve the same result with a durable power of attorney, accompanied by a letter stating that this power will go into effect if certain events take place. An attorney can hold both documents until you’re needed.