In times of unforeseen circumstances or incapacity, a power of attorney serves as a crucial legal document that grants authority to another individual or financial institution to act on your behalf. This authorized person, known as an agent, is entrusted with the responsibility of executing specific financial transactions that you may be unable to handle. These transactions can range from paying bills and managing insurance claims to selling real estate and filing tax returns.
While your spouse may be capable of handling basic bill payments, certain financial transactions, such as the sale of investments or property, require the signatures of both spouses. Moreover, if you possess assets solely in your name, your spouse would have no access to these assets in the event that they are needed to cover medical expenses resulting from your disability.
It is worth noting that there are different types of powers of attorney. Some are designed for specific transactions or temporary financial management when an individual is away. On the other hand, a durable power of attorney for medical care allows you to appoint someone to make medical decisions on your behalf if you become incapacitated. This is a separate document from the financial power of attorney.
Typically, a "durable" financial power of attorney takes effect upon signing and remains in effect throughout any period of incapacity until your passing, unless you choose to revoke it. This type of power of attorney grants the agent a wide range of authority to handle various financial matters on your behalf.
To ensure the effectiveness of the power of attorney, it is advisable to consult an experienced estate planning attorney who can draft the document in accordance with state laws. It is important to note that these laws may vary from one state to another.
In addition to granting broad powers, the power of attorney must specify certain rights granted to the agent. For instance, you may authorize the agent to make gifts on your behalf, complete and sign tax returns, exercise stock options, or initiate legal action against a third party. However, you may also choose to impose restrictions, such as conditions under which your assets can be sold.
In conclusion, a power of attorney is a vital legal tool that allows someone you trust to manage your financial affairs when you are unable to do so. Seeking guidance from an experienced elder law attorney or estate planning attorney is crucial to ensure that the power of attorney meets all legal requirements and addresses your specific needs.
Reference: WMUR (May 5, 2022) “Reasons you may need a durable power of attorney”
Suggested Key Terms: Elder Law Attorney, Estate Planning, Power of Attorney