Most people think that estate planning only consists of a detailed account of how one’s assets will be distributed upon his or her death. While this does make up a substantial portion of estate planning, it is not the only thing that needs to be considered. Another important element of estate planning is how one’s medical and financial affairs will be handled in the event that he or she suddenly becomes unable to make decisions pertaining to those matters on his or her own.
In order to protect one’s financial well-being during times of incapacity, an individual can choose to create a durable financial power of attorney. Basically, this power of attorney is a document that gives another individual the legal authority to make financial decisions when the creator of the power of attorney becomes incapacitated.
An individual can define the parameters of an agent’s financial power, but it can be quite broad in nature. Through a power of attorney, an individual can delegate powers to an agent such as paying living expenses and taxes, taking care of medical expenses as they arise, managing investments, collecting retirement benefits, and even running an individual’s business.
Giving such a broad range of powers may seem daunting. However, the law requires that an agent act in accordance with the estate planner’s best interests. This means that the agent cannot simply do what he or she wishes with an estate planner’s finances. This point can often lead to disputes that require estate litigation, especially when an agent’s actions affect a beneficiary’s inheritance.
Durable financial powers of attorney can be quite helpful to those seeking to create a holistic estate plan. However, they’re not right for everyone. Those who choose to create this document should carefully choose an agent they can trust and place limitations that agree with the estate planner’s best interests. Those who want to learn more about powers of attorney, how they can be beneficial, and determine whether they are right for them can discuss them with a qualified legal professional.