When creating an estate plan, it’s important to think about what would happen to your finances if you were to become incapacitated. If you’re unable to make your own decisions, you want to know that someone responsible can step in and do so on your behalf.
A durable financial power of attorney gives another person, known as an agent, the ability to perform a variety of tasks. These include, but are not necessarily limited to, the following:
- Paying your bills and taxes
- Paying medical expenses as they arise
- Managing real estate, such as making mortgage payments and collecting rent payments
- Collecting retirement and Social Security benefits
- Operating your business
- Hiring professionals to assist with specific tasks
With so many potential responsibilities, you must carefully choose your agent. You want to name someone who is reliable, trustworthy, knowledgeable and willing to take on a wide variety of responsibilities and challenges that are sure to arise.
Keep in mind that your agent doesn’t have the power to do whatever they want. Instead, they’re required by law to follow your direction while acting in your best interests.
It doesn’t matter if you’re creating your estate plan or reviewing one that you have already put in place, consider if now is the time to institute a durable financial power of attorney.
If you’re ready to make this move, narrow your list of potential agents and then compare the pros and cons of each one. From there, make your final decision, ask the person if they agree to your request and codify that person’s role in your estate plan.