FINANCIAL POWER OF ATTORNEY
A financial power of attorney is a written document giving another person the legal right to manage your financial transactions in the event you become incapacitated. A power of attorney is a vital part of any estate plan.
The powers granted through a financial power of attorney depend on the terms of the document and vary widely. A power of attorney may be broad or
limited and specific. All powers of attorney terminate upon the death of the principal (the maker). Unless special language is used, powers of attorney may also terminate when the principal becomes incapacitated (unable to make or communicate his or her own decisions). When the intent is to designate a backup decisionmaker in the event of incapacity, a “durable” power of attorney should be used. Durable powers of attorney do not terminate when the principal becomes incapacitated. It is a good idea to update powers of attorney periodically to be sure that banks and other financial institutions will honor them.
What does a financial power of attorney do?
• Allows you to appoint a trusted person to manage your finances when you are incapable of doing it
yourself, including things such as paying your mortgage and other bills, deposit/withdraw money from
a bank account, signing your tax return or other legal documents.
• Avoids going to court to request the court to appoint a conservator to manage your financial affairs
Do I Need a Financial Power of Attorney if I Already Have a living trust?
Yes, although a successor trustee can manage the assets within the living trust, a financial power of attorney is required to manage the large number of the other financial matters that occur outside the living trust. (Note: Often one person will be elected to be both the successor trustee under the living trust and the financial power of attorney.)