One of the pillars of a solid estate plan is having a financial power of attorney in place. A designated financial power of attorney empowers someone to make financial decisions on your behalf should you become incapacitated or unable to make such decisions on your own. Incapacitation can happen for many reasons, whether because of an accident, a stroke, Alzheimer’s or another event. If you or your spouse becomes unable to make financial decisions for any reason, this doesn’t mean that all financial activity stops. It keeps going, and that’s why a financial power of attorney is necessary.
Evaluating your options
So who do you choose to make such momentous decisions? It should be someone you trust, obviously. The person must be at least 18 years of age and of sound mind. When you and your spouse are younger, it usually makes sense to designate each other as your financial power of attorney. As you age, however, it can be wise to reassign power of attorney to a trusted adult child. Power of attorney does not have to be assigned to a family member, however. People without children, for example, may choose to assign financial power of attorney to a trusted friend or another person not within the immediate family.
A tailored role
The scope of duties a power of attorney can bestow can be as limited and comprehensive as you like. In other words, you can designate a power of attorney to take care of everything, or you can limit their powers to certain transactions, like your retirement or tax obligations. Not sure what kind of arrangement would work best for you? Having a conversation with an experienced estate planning attorney can help clarify your options and set you on a path to financial security and peace of mind in your older years.