A common estate-planning issue to consider is whether to give someone else the authority to make certain decisions for you. You might, for example, want to consider who will make financial decisions for you if you become incapable of making those decisions for yourself while you’re still living. Or you might perhaps want to simply delegate certain decision-making authority to a person of trust and expertise even if you are still currently capable of making those decisions. A Financial Power of Attorney is an estate-planning document that is commonly used to give the authority over certain financial decisions to someone else. Basically, one person (referred to as the “principal”) gives financial decision-making authority over to someone else (referred to as the “agent”).
Depending on how you draft the Financial Power of Attorney document, the authority given can become effective right when you sign it, or at a later date (for example, if and when the principal becomes incapacitated). It is common for spouses to have current and active power of attorney over financial matters of the other spouse. And this makes sense. Say for example, one spouse goes out of town on vacation, and during that time it becomes necessary to make a financial decision that requires consent of both spouses. In this situation, having a financial power of attorney in place can avoid severe inconvenience.
Also, depending on how you draft the Financial Power of Attorney document, you can give broad power to your agent to act on your behalf, or you can limit that power. Some people want to give their agent broad power over every aspect of their financial affairs. Others want to limit the authority to things like investing in the stock market, filing taxes, or handling various transactions with financial institutions.
People who have been asked to accept an appointment of agent should do so with caution and understand the duties that come with being an agent. Agents, for example, must do things like avoid conflicts of interest with with principal, keep the principal’s money separate from the agent’s, and keep accurate records. The agent will be exposed to liability if he or she breaches a duty to the principal.
Whether you need assistance drafting and executing a Financial Power of Attorney, or you have been asked to accept an appointment of agent on a Financial Power of Attorney, the experienced attorneys at Giordano & Heckele, PLLC can help. Call today for a consultation (520) 433-9031, or email us at [email protected]