It goes without saying, but in one way or the other, you may find yourself in a position where you can’t make financial decisions by yourself. And it would be the best to appoint someone who can act on your behalf should you reach that stage. That is where the financial power of attorney comes in handy.
Read on to learn about the Financial Power of Attorney( POA) and its importance.
Definition of Financial Power of Attorney
A financial POA is a legal document made alongside the will. It names someone to make financial decisions if you cannot do so yourself. This person is called your agent or representative, and you are the principal. You can give your agent as much or as little authority as you want and can also change your mind at any time.
How Do You Make a Financial Power of Attorney?
The Principal person creates the financial power of attorney by drafting it and signing it before a notary public for it to be valid or during an open house appointment. It should be witnessed by another signatory who is at least 18 years old or maybe witnessed by an agent.
While creating the document, some banks require you to use their forms to open a checking account or transfer assets.
But remember that nobody should weigh in on your financial decisions, not even family members. It is essential always to inform your relatives when you make changes regarding your money. Your Financial POA will be valid for a period that you choose, but you can revoke the timeline whenever you wish.
How Does a Financial Power Of Attorney Work?
It’s done in case of an emergency or incapacitation where the individual cannot manage their finances.The designated person will have complete control over all money and assets belonging to the individual. Once the POA is executed, the representative can decide on a property, investments, and other principal resources. You are also obligated to disclose your actions and expenditures to a third party.
A power of attorney ends when the individual regains their ability to make sound financial decisions or passes away.
How Do You Choose an Agent?
The agents need to be 18 years and above and must be willing and able to handle the task at hand. It would be the best if you appoint someone you trust dearly, someone that’s trustworthy and who can be trusted with such important tasks.
What Can an Agent Do?
The principal has the power to give the agent authority to do anything with their financial affairs, except a power of attorney cannot be used to incur debts without the principal’s consent.
Here are the powers the agent can execute:
- Pay taxes
- Purchase insurance
- Real estate transactions
- Personal property transactions
- Securities transactions that take place on stocks, bonds
- Transactions made with banks and other financial institutions
- Taking care of a company’s daily operations
- Transactions involving a trust or other beneficiary
- Claims and litigation
Issues to do with the financial power of attorney are often confusing. So, to learn more about the financial power of attorneys, we have all the details and documents you may need. Download a free power of attorney template document here.