During the creation of your estate plan, you may consider creating a power of attorney over your financial affairs. Powers of attorney are important because they give someone else the ability to access and manage your finances. If you become incapacitated or otherwise unable to handle important financial matters yourself, the power of attorney created as part of your estate plan is in place to protect you. Understandably, however, the giving of such a significant power may give you pause.
If you are concerned about giving someone a power of attorney over your financial affairs, consider the following:
- Choose the person who will serve in this role carefully. It does not necessarily have to be someone with a legal, tax, or financial background. Rather, it should be someone you trust and who can act responsibly.
- Consider leaving the power of attorney with your attorney for safekeeping. Instead of giving the document to the person you have appointed, you can instead advise them as to where it is kept. In the event that it is needed, the person can contact your lawyer. It is less likely that the document can be misused if the person has to go through your attorney to get access to it.
- Similarly, you can opt to keep the power of attorney in your possession, while telling your designated attorney-in-fact where it is kept. Ideally, this will reduce the likelihood that it will be used during a time where you have full mental capacity or the ability to handle your own affairs.
- Discuss with your attorney whether a springing power of attorney is a good choice for your overall estate plan. Springing powers of attorney differ from durable powers of attorney because they are only effective when you are mentally incapacitated, or when some other pre-determined condition is met.
As you create your estate plan, many questions will likely arise. Fortunately, our office is here to help. To learn more helpful tips, we encourage you to sign up for our free newsletter today. If you have any other unanswered questions, we invite you to contact our office directly.