Using a financial power of attorney, you essentially make someone else your financial agent. This gives them legal power to handle your money. They’re obligated to work toward your best interests, but they do things that you can’t realistically do for yourself at your age.
What all this includes can be different in every case, but a few examples are as follows:
— Paying your bills. This could just mean keeping the lights on, paying income taxes or property taxes, paying off credit cards, and things of this nature.
— Covering medical expenses. A power of attorney is often used when a medical condition makes it impossible for you to take care of these common tasks, and that condition likely comes with significant related expenses.
— Dealing with your assets. These could include bank accounts, retirement accounts, pension plans, and more. They could also include real estate, which may be taken care of or sold.
— Handling your insurance. Even if you already have insurance, there may be a fair amount of paperwork to do, costs to cover, money to collect, and much more.
— Running a company on your behalf. If you’re a small business owner, you don’t want the entire company to go under just because you’re not doing well. Your agent can help to make sure it keeps going.
As you can see, the power of attorney is both very useful and fairly powerful. Be sure you understand the ins and outs of how it works and carefully consider who you want to choose when drafting yours.
Source: Findlaw, “Durable Financial Power of Attorney,” accessed June 30, 2017