There are few people who take the time to consider what will happen to their family, their estate, and their assets should they became mentally incapacitated and unable to make decisions. It isn’t a pleasant thought, but considering how important it is to be prepared for such circumstances, more people ought to pay it more mind.
One of the best ways to be prepared in the event you are unable to make your own decisions regarding your finances is to grant durable financial power of attorney to a trustworthy person in your life.
What is durable financial power of attorney?
Durable financial power of attorney is the power granted to a trusted individual, typically a spouse or close relative, to act on your behalf in financial matters should you become incapacitated. This power can be drafted fairly quickly and can be designed to go into effect as soon as the document is signed. Keep in mind that you will need to designate that the power of attorney is “durable,” rather than active. If you have granted active power of attorney, in some states it automatically ends if you become incapacitated, which is the opposite of the result you would want. A durable financial power of attorney remains in effect throughout an individual’s lifetime unless he/she decides to cancel it at a later date. As with other types of power of attorney, durable financial power of attorney will expire when the principal dies and can be revoked under certain circumstances such as divorce or court mandate.
The person you choose to hold durable financial power of attorney over your assets needs to be someone of high moral fiber. It is possible to grant as much or as little responsibility to your agent as you would like, but keep in mind that even if their responsibilities are restricted to certain areas, they will maintain total control over those areas you specify. This could be everyday expenses for you or your family, or it could be maintaining property, paying taxes and creditors, or even operating your small business. It is easy to see that such a great responsibility should be put into the hands of someone capable and honest, someone you would trust to do right by you as well as your family. Specific duties of the agent on behalf of the principal include but are not limited to:
- To buy and sell insurance policies and annuities
- Collecting Social Security benefits, Medicare, and other government funds
- File/pay taxes
- Maintains accurate and detailed records
- Invests and manages finances, stocks, bonds
- Claims property awarded such as property gained through inheritance
- Hires legal representation
- Manages retirement accounts
The thought of what might happen to your family and estate after you pass or in the event you are incapacitated can be uncomfortable to entertain. But the more prepared you are now, the better off your loved ones and assets will be in the future. If you are in the Bellevue area and would like to learn more about durable financial power of attorney, contact Lyons | Sullivan today. We have the experience to answer any of your questions and help you prepare for the future of your family and estate.