At all different moments in life, we might be anxious about what our future will look like. In terms of finances, the only way to avoid a mess for your loved ones is with a thorough plan. And even if we think that we have everything under control, it's never a good idea to leave things to chance. That’s why it’s called estate planning, and not estate hoping!
And, as responsible adults, it is our obligation to deal with our finances responsibly. This means, at a minimum, having a power of attorney. Everyone over the age of 18 should have one!
Continue reading to know more about what exactly a power of attorney is in estate planning.
A power of attorney is a legal document that allows the person who creates it (the “Principal”) to appoint someone to act on their behalf (an “Agent”). It is letting someone act as if they are you for purposes of finances. Opening accounts, paying bills, talking to mortgage companies, and so much more.
As the chief executive of your estate, it's always a good idea to choose someone you trust and respect for your power of attorney. If you become unable to make decisions because of an accident, injury, or illness, your agent will do it for you. In the simplest sense, a power of attorney is a document that appoints a representative or agent who will act on behalf of another person.
Depending on your needs, you can make multiple arrangements for your power of attorney in your estate plan. This means that you can choose one person to be your power of attorney for your finances and another to make medical decisions if you can’t do so for yourself.
For instance, you can appoint your sister, a doctor, to be your medical agent, and your brother who’s really good with money as your financial agent. Or if you’re married, you will likely make your spouse both. What’s important is making sure you appoint a qualified person you trust the most!
A power of attorney must be authorized in writing. A power of attorney can also be made valid for a specific period of time or an indefinite term. Maybe you’re leaving the country or state for a few months and want to make sure someone can help with financial affairs while you’re away. The power of attorney can be made only good from the day you leave, until the day you get back.
It’s important to know the several other requirements and inclusions for a power of attorney to be legally binding.
For instance, a power of attorney must generally be signed or by the Principal, witnesses, and a notary in order to be valid. The person creating it must be of sound mind–which is why we require witnesses.
One of the primary reasons why we should have a power of attorney is because it helps us answer the first big question in estate planning: who takes care of you, if you can’t take care of yourself?. A power of attorney can help us take care of our finances, property, and maybe most importantly, medical decisions.
Having a power of attorney is one of the most important aspects of your estate plan. Always remember that it is important to appoint someone whom you trust and your loved ones can eventually rely on when the time comes.
One limitation to note: your power of attorney is only effective as long as you’re alive. It can’t help your family or other loved ones with any of your assets after you’ve passed away. For that, we need to look to other solutions like wills, or even better, trusts! Contact us to find out more.
Looking for an estate planning attorney in Tulsa, OK? Founded by estate planning attorney Tim Powell, New View Estate Planning has helped hundreds of Oklahoma families move from uncertainty and worry to relief and confidence through carefully-crafted estate plans. Contact us today!
(To learn about some of the most common misunderstandings in estate planning, and how you can avoid them, click here to download our short guide, The Four Biggest Estate Planning Myths).
Call us at 918-246-6813, or click here to book a call, to talk about how you can protect yourself and the people you care most about!