In a previous post, we looked at the purposes of a healthcare power of attorney. Today, we look at financial powers of attorney. Like a healthcare powers of attorney, financial powers of attorney allow others to make decisions on your behalf.
A financial power of attorney relationship is created by a written document where you (the principal) appoint an agent to act on your behalf. This permits the agent to enter into agreements on the your behalf for personal, financial, business, and real estate purposes. Because of this, you want your agent to be someone you trust. Powers of attorney are revocable by the principal. Powers may also be invalidated due to life-situations such as a divorce.
In a financial power of attorney agreement, the powers an agent has can be as broad or as narrow as the principal wants. They can include managing assets such as real estate, personal property, stocks, and bank accounts. An agent may also act on behalf of a principal for business management, litigation, and trust agreements.
The powers given to a financial power of attorney can become effective immediately or can occur after a specific date or occurrence. In situations where the principal becomes incompetent or incapacitated, powers can remain indefinitely so long as specific language is in the document allowing this to occur. If a power of attorney remains effective in these situations, the agent is said to have a durable power of attorney.
Financial powers of attorney can be part of a comprehensive family wealth management plan. Specifically, a power of attorney can aid in emergency situations where actions need to be made on the principal’s behalf. Having a properly written power of attorney can provide peace of mind not only for you, but also for your family members.