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Do You Need a Financial Power of Attorney?

Apr 26, 2012

Posted by

Kris Miller

As a PREtirement and living trust expert and National Speaker, Kris Miller assists people in developing complete estate packages. Her practice focuses on helping seniors reduce their tax liabilities, Read more

Almost every day, life brings you things that you need in order for you to enjoy a happy and meaningful living.  But what if something happens that causes you to lose your ability to think or to make the right decisions for yourself?  That can happen, and often without prior warning.  That’s why you should have a “Power of Attorney.”

So what does a power of attorney mean?  It is a power of authority under seal, an instrument in legal writing appointing or authorizing one to act as the agent or attorney in fact for the person granting it for some specified limited purpose.

When you make or create and sign a power of attorney you are giving another person the legal capacity to act or do something on your behalf.  That person is called your “agent” or your “attorney in fact.” And that person does not have to be a lawyer.  The agent can be a member of your family, a close relative or a friend whom you can trust to act with diligence.  It is important that your agent has no conflict of interest in anything you want them to manage for you.

You can also stipulate that unless you become fully incapacitated you can still keep control over all your affairs and transactions.

A power of attorney may be in the form of a financial or medical authority.  A Financial Power of Attorney can be filed to ask the court for authority to manage or handle your financial transactions.  A Medical Power of Attorney can be filed to ask the court for authority to make medical decisions if you are medically incapacitated. 

So what are the things that an agent can do on your behalf?  Your appointed agent can manage your financial transactions, buy or sell your properties, handle your retirement benefits, file and pay your taxes, invest your money in banks, stocks and bonds, buy and sell your insurance policies and to manage your other personal needs. A Financial Power of Attorney form should be filled in by the person granting the authority, then signed and filed at your local court clerk’s office, where it will be stamped sealed.  Keep the original copy safe for future financial transactions.

One last thing to consider:  Your financial power of attorney is no longer valid after you die.  That means your agent or attorney in fact no longer has any authority to handle the things on your behalf.  So if you want your agent to also serve as your executor, you must state that in your last will and testament.