Power of Attorney
Estate planning is an important piece of the financial planning process. Most everyone has heard of healthcare directive, but along with that each person should also have a Power of Attorney. This document allows you to appoint another person to act in your place should you become incapacitated and no longer can manage your finances. The person you elect to be your agent should be someone you trust and has your best interest in mind as this person has the legal right to make the decisions you would make if you were able.
The laws governing powers of attorney are state specific. Before creating your power of attorney document, you should understand the laws both where you live and where you have assets. Working with an attorney to ensure you understand the local laws is suggested so that you meet the requirements of the local laws.
There are different types of powers of attorney and you will need to understand them prior to creating yours.
- Durable-This type grants your agent to act for you if you become incapacitated. This is the typical type of document when creating a power of attorney document for estate planning purposes.
- Non-Durable -With a non-durable power of attorney, your agent’s power ends when you become incapacitated. An example of when this type is helpful is if you want to grant your financial advisor the ability to manage your investments on a day-to-day basis.
- Springing-This type of power of attorney is only in place when a specific condition is met. A springing condition could be you becoming incapacitated. Until this condition is met, the agent does not have any legal authority.
- General-This type authorizes your agent to act for you in all situations. The only things your agent cannot do with a general power of attorney is enter into a marriage for you or change your will.
- Financial-A financial power of attorney grants your agent limited authority as you get to choose the subject matters. You might want your agent to pay your bills or file your taxes. This type can be either durable or non-durable.
- Medical-Like the financial power of attorney, the medical power of attorney has limited authority. This type allows your agent to make healthcare decisions for you.
The type of power of attorney you choose is dependent on what situation you are planning for. If you currently do not have a power of attorney, feel free to reach out to me and I can help you get started on the process. You can reach me at mike.rebischke@lpl.com.