A power of attorney (POA) for financial matters is often appointed for a specific purpose (for example, to sign a document when you cannot be present to sign) or as protection in the event of a medical issue, accident, or diminished mental capacity.
The bulk of what someone can do for you with a POA includes the following: pay bills, access bank accounts, manage real estate and investments (which includes buying and selling stocks or bonds), and file taxes. As you can see, they have considerable “power” over your financial and legal well-being.
What makes a good POA?
You need someone who shows a great attention to detail, is committed to taking the tasks assigned to them very seriously, has a decent understanding of finances (ideally business too), and can collaborate with legal and financial professionals without losing their cool.
Who should you pick?
Above everything, you need to be able to trust this person with everything you’ve got. Literally. This person can loot your bank account and sell off all your property, and there’s very little you can do about it. Most people name a spouse or close family member, but it’s completely up to you.
What type of POA do you need?
A durable power of attorney(DPOA) is generally recommended, as the DPOA immediately goes into effect upon signing and remains in effect even if you become incompetent or incapacitated. With a DPOA, there is no question about when the POA becomes effective (as there often is with a springing POA), and the agent may act on your behalf if you become incompetent or incapacitated. This isn’t the case with a limited POA, which is created to achieve a specific goal and then that’s it.
Who would you trust the most to be your POA and why: family member, friend, professional associate, or colleague?
This article is provided by Everplans — a life and legacy planning company dedicated to transforming the way people get their families organized. For more information, visit: everplans.com
Neither Transamerica nor its agents or representatives may provide tax, investment, or legal advice. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors and financial professional regarding their particular situation and the concepts presented herein.