What is a financial power of attorney?

A person who’s creating their estate plan has a variety of decisions to make. One of these is who will take care of their finances if something happens to them. While some people may not think much about this, others opt to take the proactive approach and name a financial power of attorney.

The financial power of attorney designation gives the individual the ability to make decisions about your finances if you’re incapacitated. This encompasses everything, including paying your bills and making decisions about your assets.

Who should you name as the financial power of attorney?

Determining who to name as the financial power of attorney is a personal choice. You need to appoint someone who you know will act in your best interests. They shouldn’t ever act in their own best interests but should always think about how you would handle situations before they decide what to do.

You might be tempted to name a close family member, such as a spouse or adult child, as your financial power of attorney. Think twice before you do this because they might be emotional from your condition and may not be up for trying to make major decisions.

Remember, this person will be able to do all the things you’d usually do. While you may not like to think about it, there’s a chance that a breach of fiduciary duty may occur. For this reason, you should speak to your attorney and ensure that you take all the necessary steps to protect your assets when you set up the financial power of attorney designation.