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  • Financial Power of Attorney: Do I Need One?

    financial power of attorney

    If you are over 18, chances are you need a financial power of attorney, especially if you have income or own real estate. It’s also particularly important if you have health problems.

    What Does a Power of Attorney Do?

    Naming a financial power of attorney ensures that someone you trust (usually called your “agent”) will be able to manage and oversee the many financial tasks that will arise if you become incapacitated. Paying bills, depositing checks, and handling insurance paperwork can all be handled by your agent if you sign a power of attorney. A financial power of attorney can be expanded to include tasks such as maintaining property, managing investments, and running a business.

    What are the Benefits of a Power of Attorney?

    If you do not have a power of attorney and you become incapacitated, your relatives or close friends will have to petition the probate court and ask a judge to name someone to manage your financial affairs. In Georgia, this person is called a conservator. Conservatorship proceedings can be expensive and time consuming. Your family is asking a judge to rule that you cannot competently take care of your own affairs, which may be embarrassing for some people. Furthermore, these proceedings are public record. And if relatives fight over who should be appointed as conservator, the proceedings may become hostile and contentious.

    What is a Springing Power of Attorney?

    Most people choose to sign a “springing” power of attorney – that is, a power of attorney that “springs” into effect only when you become incapacitated. Most people prefer this option because it still allows them complete control over the finances without the possibility of fraud or theft. Although this type of power of attorney is the most common, it’s not without its problems, such as:

    Delay – Instead of being able to use the power of attorney immediately when the need arises, the agent must get a determination of your incapacity before he/she can act on your behalf. In other words, someone – usually a doctor, must certify that you can no longer make your own decisions. This kind of determination could take days or weeks, which could potentially disrupt the handling of your financial affairs.

    Definition of Incapacity – as you now know, your power of attorney requires that you become incapacitated before your agent can step in and handle your financial matters for you, but what does “incapacitated” mean? What if one doctor believes you are incapacitated, but another doctor does not? What if changes in your health require assistance in managing your affairs, but you’re not incapacitated? What if you have some good days and some bad days? These are gray areas that make a springing power of attorney very difficult for your agent when you may need help.

    As you can see, it’s important to have a financial power of attorney that suits your needs. Unfortunately, none of us are promised a tomorrow, so the sooner you have an estate plan designed around your intentions and goals, the better.

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    Everyone’s situation is different; what it takes for you to be financially independent is unique to you. If you’d like to discuss any questions or concerns you have your financial life, please contact us for a no obligation consultation to see how we can help.

     

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    Financial Power of Attorney: Do I Need One?

    by Michelle Thompson time to read: 2 min
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