Where there’s a will, there’s . . . a financial power of attorney (Part 2 of 2)

When a client comes to us to have a will drafted, we make sure that the client, at the end of the process, has not only a will but a complete set of basic estate planning documents.  The set also includes an advance directive for healthcare and a financial power of attorney, two documents that enable you to influence what happens to you and your property while you are alive but unable to take care of these matters yourself.  In this part two of a two-part series, we explore the financial power of attorney.

The financial power of attorney that we typically draft with an estate planning package grants your designated person – the “attorney-in-fact” – certain enumerated powers to deal with your financial matters.  The powers that you might grant to your attorney-in-fact include, for example, the power to enter into transactions with your bank or credit union, to make payments on your behalf, to deal with your real property or personal property, or to enter into loan, business, or insurance transactions.  When a power is in effect, your attorney-in-fact may deal with your property or financial matters to the same extent and in the same ways that you normally could.  Your attorney-in-fact may make decisions on the same matters that you would have the right to do, and you will be bound by your attorney-in-fact’s decisions and actions.  Your attorney-in-fact, in turn, is legally bound to act for your benefit.

You don’t have to give any powers away immediately, though.  Our typical financial power of attorney only goes into effect when you are unable to handle your business and financial affairs in a prudent and reasonable manner.  This decision is not made lightly or uncertainly.  The determination that you are incapacitated and your financial power of attorney should go into effect in this way is made, in writing, either by your principal attending physician or by a committee of trusted loved ones or friends nominated by you.

In short, having a financial power of attorney that can go into effect in an emergency can prevent your financial affairs from stalling or suffering while you are not in position to handle them yourself.

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