Power of attorney
As you plan your financial future, have you thought about who will handle your finances and other important matters should you become seriously ill or otherwise unable to do so? Granting a power of attorney to a trusted individual can help you keep your affairs on track in the event of your incapacitation.
A power of attorney is a legal document in which you authorize someone else to take specific actions on your part. The person you appoint is known as your “agent” or “attorney-in-fact.” You can authorize your agent to handle a variety of tasks, including manage expenses, pay bills, make deposits and withdrawals at your bank, monitor your investments, or collect Social Security, Medicare, or other benefits.
You can give your agent as much or as little power as you like. Granting a general power of attorney gives your agent broad authorization to act on your behalf in a variety of situations. Should you choose a limited power of attorney, your agent can act on your behalf only in the specific situations you indicate. For instance, you could grant a power of attorney that only allows your agent to make medical decisions on your behalf.
It’s important to note that when you grant someone a power of attorney, you still retain your rights and can still manage your own affairs as long as you remain mentally competent.
There are two basic types of power of attorney: “durable” and “springing.” A durable power of attorney takes effect immediately and continues even in the event of your incapacitation.
Under a springing power of attorney, your agent cannot act on your behalf until you become incapacitated.
A power of attorney is terminated upon your death, and you may revoke it at any time before you die, provided you are mentally competent. Other situations that could terminate a power of attorney include divorce (in some states) – if your spouse is your agent – and in cases in which no agent is available to serve. You can avoid this by naming an alternate agent in your document.
When considering who will serve as your agent, it is important that you choose someone who is trustworthy and responsible. You should also name an alternate agent in the event that the primary agent is unable to assume his or her duties. In this event, a court may be left to choose someone for you. This can be time consuming and expensive, could cause family disputes, and may not be consistent with your wishes.
For more information on power of attorney and the role it plays in your overall estate plan, consult your attorney and financial professional today.
Article provided by Michael P. “Perry” Grice, Associate Vice President/ Investments with Stifel, Nicolaus & Company, Incorporated, member SIPC and New York Stock Exchange, who can be contacted in the Florence office at (843) 665-7599.