Granting someone you trust a power of attorney allows that person -- known as your "agent" or "attorney in fact" -- to manage your financial and personal affairs if you are unable to do so. Your agent is empowered to sign your name and is obligated to be your fiduciary -- meaning they must act in your best financial interest at all times and in accordance with your wishes.
A power of attorney can be made “springing,” which means that it only goes into effect under circumstances that you specify, the most typical being when you become incapacitated. Often that means your agent cannot act until he or she provides doctors' letters and sometimes court orders to prove you are incapable of making decisions for yourself.
An attorney can help you decide which form makes the best sense for your circumstance. In any case, take care in choosing your agent. That person should be competent, trustworthy, willing to take on the burden of your affairs and financially secure.
If you choose a relative or friend as your agent, you probably won't have to pay them. But if you name a bank, lawyer or other outside party, you will have to negotiate compensation, which can range from hourly fees to a percentage of your assets paid annually.
Why do you need a power of attorney?
No one is immune from aging or the loss of mental clarity that may come with it. And you're never immune to health crises that may leave you unable to handle the business of your life: paying bills, managing investments or making key financial decisions.
If you become incapacitated without having a power of attorney, the court may appoint a “conservator” to manage your affairs and handle your assets. This process might cost your family well over $2,000 in attorney’s fees and court costs, not including the cost of the lawyer who will be appointed by the court to represent you during the court proceeding (this lawyer is called the guardian ad litem).
The person chosen by the court may not be someone you would have picked. Assigning someone you choose and trust a power of attorney now could save you and your family from heartache later on.
A power of attorney can be made “springing,” which means that it only goes into effect under circumstances that you specify, the most typical being when you become incapacitated. Often that means your agent cannot act until he or she provides doctors' letters and sometimes court orders to prove you are incapable of making decisions for yourself.
An attorney can help you decide which form makes the best sense for your circumstance. In any case, take care in choosing your agent. That person should be competent, trustworthy, willing to take on the burden of your affairs and financially secure.
If you choose a relative or friend as your agent, you probably won't have to pay them. But if you name a bank, lawyer or other outside party, you will have to negotiate compensation, which can range from hourly fees to a percentage of your assets paid annually.
Why do you need a power of attorney?
No one is immune from aging or the loss of mental clarity that may come with it. And you're never immune to health crises that may leave you unable to handle the business of your life: paying bills, managing investments or making key financial decisions.
If you become incapacitated without having a power of attorney, the court may appoint a “conservator” to manage your affairs and handle your assets. This process might cost your family well over $2,000 in attorney’s fees and court costs, not including the cost of the lawyer who will be appointed by the court to represent you during the court proceeding (this lawyer is called the guardian ad litem).
The person chosen by the court may not be someone you would have picked. Assigning someone you choose and trust a power of attorney now could save you and your family from heartache later on.
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