In estate planning, we often talk about the uses of wills and trusts, but these aren’t the only important documents to consider including in your estate plan. One document that all of us should have in our plans is a financial power of attorney, or financial POA. A financial POA allows another person, called an agent, to make financial decisions for you if you become unable to make them by yourself, due to illness, injury or other condition.
The POA should list the agent you are appointing to act on your behalf, along with their name, address and other contact information. It should specify the powers you are giving the agent, such as the responsibility to pay bills, make investments or buy or sell property, for example. It should also list any limits on their authority.
The POA should have an effective date and an expiration date, or a statement that it will be effective until you revoke it. You may also decide to list a successor agent who can act if the primary agent is unwilling or unable to.
You must sign the POA and it may need to be notarized. You can revoke your POA by completing a revocation form, signing it and having it notarized. Then, you will need to give your agent a copy of the revocation.
A POA can offer several benefits. If you create the POA and then are unable to act, your agent can step in immediately to make financial decisions. It can prevent others from mismanaging your finances.
It also allows you to grant responsibilities to your agent and retain some for yourself, if you choose to do so. It can provide you with peace of mind, knowing that you have a trusted person in place to take care of your financial affairs.