Preparation almost always pays off in the long run. You never know what will happen to you in life. There could be a time when you find yourself incapacitated for one reason or another, leaving you unable to make decisions for yourself. This is why it is prudent to have a power of attorney in place which is designed to protect you under these types of circumstances.
What is a power of attorney (POA)?
A power of attorney is a legal instrument which gives authority to another person to make decisions on your behalf when you are incapacitated. The person you designate to make decisions for you is known as the “agent” or the “attorney-in-fact” while you are referred to as the “principal.” You can give the agent authority that is broad or limited.
There are two main types of POAs: financial and healthcare. Both types of POAs can be designed to give general or limited authority.
How to form a POA
The first thing to consider is who you should choose to be an agent. You will want to find somebody who you trust. The agent should understand your wishes on what you want to happen in the case of you being incapacitated and unable to make decisions for yourself.
Next, you will need to create the actual legal document that will legally form the POA agreement that gives your chosen agent the authority you wish the agent to have. Hire a competent and experienced attorney to draft your POA legal document. Be sure to consult thoroughly with the attorney to ensure all of the terms you want in the POA are included.
Sign the POA document in accordance with legal requirements of the jurisdiction where you reside. Each state has different regulations on how to properly form a POA. You will likely need to have the signing of the POA witnessed in some way. Some states will require one witness while others require two. Whether or not the agent can serve as the witness will depend on the specific state’s law. You may also need to have the POA notarized.
It is possible your state requires that you record the POA document with a particular government agency. This may be the local court or commonly a county governmental office.
Choosing the right agent for your POA
Deciding who to be your POA agent is an important decision that you should not take lightly. Each agent should be suited to execute the specific responsibilities of the POA. This means for a healthcare POA you may want to choose a spouse, family member or loved one who knows you personally quite well. For a financial POA you will want to choose somebody who is not only somebody you trust but also one who is reasonably knowledgeable about personal finance and is capable of handling money.
Overall wealth management strategy
A POA, particularly a financial POA, is only a small part of a comprehensive wealth management strategy. You will also want to have a personal financial plan in place which includes a reasonable budget and a balanced investment portfolio. Also, having an estate plan is a must to protect your family and loved ones. Please give us a call if you have any questions about comprehensive wealth management and whether or not you could benefit from it!
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