A financial power of attorney is a vital tool to have in place if you want to ensure you and your assets will be cared for in an emergency. But what is a financial power of attorney, and how does it work? Here are answers to some of the most common questions we get about this legal document.
What is a Financial Power of Attorney?
A financial power of attorney is a legally binding document in which you authorize someone else to make financial decisions for you. This person is referred to as your agent. A financial power of attorney is also sometimes referred to as a durable general power of attorney. This legal document is meant to be used on your behalf in the event that you are unable to make financial decisions for yourself.
Why Is a Financial Power of Attorney Important?
A financial power of attorney is critical if you ever become seriously injured, sick, or begin to lose your mental capacity due to illness or aging. Without it, there will be no one who has the legal authority to pay your bills and manage your finances. We suggest that anyone over the age of 18 have a financial power of attorney.
When Does a Financial Power of Attorney Become Active?
There are different types of financial powers of attorney, but the type that we most commonly draft here at Relational Law becomes active when you sign it. It has no “trigger” that must be met before it is used. However, the intention is that your agent will only use it in the event of your incapacity. To avoid the potential for abuse, we recommend you do not give your agent immediate access to your financial power of attorney. Instead, we suggest you store your financial power of attorney with your other estate documents and let your agent know where it is so that they can access it when necessary. Another type of financial power of attorney has a trigger, or requirement, before it can be used. People frequently require a doctor to certify that they are incapacitated before their agent can use the power of attorney. While this prevents abuse, it does make the power of attorney much harder to use. Also, if you have serious concerns that your agent will take advantage of you, you shouldn’t pick them as your agent.
Related: How to Choose Your Agents
What Can My Financial Agent Do?
Your financial agent is empowered to do anything that you would normally be able to do regarding your finances. They can write checks, sign for you, move money around, pay bills, etc.
How to Get a Financial Power of Attorney
The best way to get a financial power of attorney is to hire an attorney who specializes in estate planning to draft a document for you that meets the requirements of the state in which you reside. This way, you can be sure the document will work properly when you need it, and you will have the confidence that your financial agent will have the freedom they need to care for you.
Here at Relational Estate & Elder Law, we create financial powers of attorney for our clients on a regular basis. If you need a financial power of attorney or other estate planning documents, call us today!
Disclaimer: The information you obtain in this post is not, nor is intended to be, legal advice. This blog shares general best practices when navigating Virginia or West Virginia law, but you should consult an attorney for advice regarding your individual situation.