Not only is it vital to make provisions for when you pass away, but it is important to make plans in the event that should you become incapacitated. Creating a financial power of attorney is a benefit to you as well as your loved ones. If you do not set this up, then when you find yourself incapable of making choices for yourself, your family and friends will have to go to court to ask for the permission to help look after your finances. If you take care of this decision today, however, you can put provisions in place immediately after you sign the document.
Now some spouses have what is known as active financial powers of attorney. For example, they would have measure of authority over their spouses' finances if they are away. If you want to create financial power of attorney for when you are incapacitated, however, one thing you absolutely have to state in a document is that you want this power of attorney to be "durable". Otherwise, in most states you will find that this power ends immediately once you become incapacitated. If you so choose, you can create a power of attorney that only starts once you are incapacitated; this is "springing" durable power of attorney.
When you sign off on a durable power of attorney, this means you are making someone else your agent, or attorney-in-fact. You may want to name an alternate agent, just in case the agent is unable to perform duties when the time comes. What does this agent do? Usually you can give this agent as much or as little freedom to oversee your affairs as you choose. An agent can pay you and your family's daily costs, using your assets. Your agent might be able to manage any property you own and be free to buy or sell property for you. He or she would also be responsible for the upkeep of these properties as well as for any taxes on it. Collecting benefits, such as Social Security or Medicare, could also be part of this job description. An agent could also have the authority to make investments in your name. Paying taxes, running a small business, and managing bank and retirement accounts could also be included.
Fortunately, the paperwork for this is not that long, and all you have to do is fill it out. That being said, certain institutions may have forms of their own for durable power of attorney. You can smooth the way for your agent to transact business on your behalf if you take care of these institutional forms as well. The document creating the financial power of attorney has to be signed before a notary public. Depending on where you live, you may also need witnesses. If real estate is something your agent would have authority over, then you might need to give a copy of the notarized document to the local land records office. Other state laws may affect this process.
Can this financial power of attorney be ended? Under certain circumstances, yes. Unless your agent is your executor too, then they have no authority over your affairs when you pass away. Financial power of attorney ends when you die. You can also take back a financial power of attorney as quickly as you made it. Anyone who is still mentally competent can take away this provision. If your spouse is appointed to be your agent and you get a divorce, then this power will end in most states. There is also the slight chance that a court can rule that your document is invalid, either because it deems that it was made through fraud or because you are deemed mentally incompetent.
If you have any questions about your estate plan, do not hesitate to consult an expert. With such vital and long-lasting decisions at stake, you cannot afford to be without legal help. Contact a probate lawyer today!