Life is unpredictable, and circumstances can change instantly, leaving you unable to manage your financial affairs. Having someone trustworthy to handle your finances if you become incapacitated is critical. A financial power of attorney is a legal document that allows you to appoint someone to manage your financial affairs if you can’t do so yourself.
If you become incapacitated without having designated someone, the court must appoint a guardian to manage your affairs. This can be time-consuming, expensive and stressful for your loved ones. You can avoid that by appointing a financial power of attorney now.
Tips for choosing the right person
The person you select should be able to put your needs first and make decisions in your best interest. It’s also beneficial if the individual lives close to you, as managing someone’s financial affairs can often require a hands-on approach. Financial competence is another critical factor to consider, so ensure the person you choose can manage complex financial tasks.
Your needs may change over time
Regularly reviewing your choice and making updates as necessary can help ensure that you have the right person in place should the need arise. Remember that you can revoke or change your financial power of attorney anytime as long as you’re mentally competent.
Make it legally binding
A formal financial power of attorney should be written, signed and notarized to ensure it stands up if questioned or challenged. It’s also a good idea to provide copies to your financial institutions and any other parties requiring proof of the arrangement.
There are certain limitations of the financial power of attorney, and you can set terms for some aspects. Working with someone who understands your wishes may be beneficial so you can set things up in a way you’re comfortable with.