The Financial Power of Attorney and its Importance in Estate Planning
– Authored by: Collin D. Dickey
The Financial Power of Attorney is one of the four essential components of a comprehensive Estate Plan. But what exactly does this document do for you? And why do you really need it?
Dementia is a general term for a decline in mental ability severe enough to interfere with daily life. This is a real life event that our loved ones deal with every day. Dementia limits their capacity to make decisions on their own, including financially. This could also arise through sudden accidents, in addition to illnesses. With a Financial Power of Attorney in place, Michigan will allow a family member or friend to step in to help make any financial decisions. Without this simple document in place, they would otherwise need to go through the time consuming and costly probate process to be assigned as a guardian. If you are leaving this decision to a judge, it might not necessarily be someone you would have chosen.
Instead of leaving your love ones with this burden, you can use this estate planning tool, while you are of sound mind, to designate someone be your Financial Power of Attorney. You can designate this person to either act “immediately” or “springing”. Immediately means they have the ability to act on certain decision now. If you elect to have this person act upon “springing”, then they can only act upon your incapacity. Look at your current documents to see which way you have your Financial Power of Attorney set up.
This document allows the individual you have selected to do things such as, pay the bills, pay your taxes, pay medical bills, manage assets, manage your business and even buy and sell homes, on your behalf. These acts must be in your best interest only. The Financial Power of Attorney terminate upon your death. Because of the importance of these decisions, it is recommended to choose a trusted and competent individual to serve. Nothing beats a conversation with this person ahead of time, as well. It is also recommended to have a “back up” Financial Power of Attorney in the event they can not serve.
For more information regarding a Financial Power of Attorney, contact our office today.