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Do You Need a Financial Power of Attorney?

POWER OF ATTORNEY - 10/29/13

A financial power of attorney is an important consideration for any individual who has substantial assets or real estate investments. The financial power of attorney has the features of a durable power of attorney but it grants authority only for financial decisions and springs into effect only under specific circumstances as directed by the principal. It is important to note that regardless of the age or physical health of the principal, having a financial power of attorney in place acts as a safeguard against possible issues that might arise in the future.

1. Ensuring Financial Matters Are Handled

A financial power of attorney gives individuals the peace of mind that if something should occur to cause incapacitation, their affairs will be managed by a trusted individual who they have selected to manage their assets. There are a myriad of financial decisions that people make every day, and these tasks will be left unattended if someone is not designated to maintain them. Simple transactions such as paying bills, managing bank accounts, and handling insurance paperwork are tasks that a financial power of attorney authorizes an agent to deal with. If the principal has substantial assets or property holdings, the importance of the financial power of attorney is magnified.

2. Protection for Business and Investments

Individuals who own investment property or operate a small business cannot afford to have these investments operate without the proper supervision or oversight. A financial power of attorney provides authority to the authorized agent to oversee the daily operation of a business or manage and maintain investment property in the same manner that the principal would if they were not incapacitated. The details of the financial power of attorney dictate the exact limits of the agent in regards to the level of authority they have, and the principal can author these limits into the power of attorney when it is formed.

3. Financial Continuity in Uncertain Times

The benefit of having a financial power of attorney in place is that no one can predict when something might occur that prevents them from making the important daily decisions that affect their financial well-being.

Tip


Itis often best to have a power of attorney in place as if not, and an individual becomes incapacitated, a court will need to step in and name a conservator to manage the affairs of the estate. This can lead to family disagreements and escalated costs if attorneys become involved, not to mention added stress during an already traumatic time.

A financial power of attorney that springs into effect during a time of duress can significantly reduce the stress and financial problems that are inevitable during such a time. It allows the principal and their family to focus on each other and not on financial distractions.

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LegalNature’s staff writers cover a wide array of topics, ranging from estate planning to business formation. Our writers are all experts in their respective fields.

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