Estate planning ensures the management of your assets and affairs according to your wishes. One essential component of this process is the power of attorney (POA). Understanding its function and purpose could protect your interests and help you make informed decisions about your future.
The function of a power of attorney
A power of attorney allows another person to act and make decisions for you in case of incapacity or inability to manage your affairs. This designated individual, your agent or attorney-in-fact, can make financial, legal and sometimes medical decisions for you.
The purpose and importance of a power of attorney
Including a power of attorney in your estate plan may serve crucial purposes. They could:
Ensure continuity of financial management
If you cannot manage your finances due to illness or injury, your designated agent could step in to pay bills, manage investments and oversee other financial matters. This could prevent potential financial challenges and protect your assets.
Provide peace of mind
By appointing a trusted individual to act on your behalf, you ensure the handling of your affairs according to your wishes, even if you cannot manage them yourself.
Help you avoid court intervention
With a POA, your family may be able to petition the court for guardianship or conservatorship in case of incapacity on your part. This process could be time-consuming, expensive and stressful for your loved ones.
Offer flexibility and control
You can customize your POA to grant specific powers and set limitations on your agent’s authority. This could allow you to maintain control over your affairs while ensuring the management of crucial tasks.
A power of attorney is a powerful estate planning tool. It could give you the security of knowing the management of your affairs will be according to your wishes, even in unforeseen circumstances.
You may want to seek legal advice about incorporating a POA into your estate plan. An attorney could help protect your interests and provide you and your loved one’s peace of mind.
