Faqs About A Financial Power Of Attorney

A part of estate planning is determining what happens with your financial matters if you are incapacitated and unable to make decisions for yourself. For many people, the answer is a financial power of attorney. However, there are some challenges to using one. If you are thinking of using a financial power of attorney, here is what you need to know. 

What Should You Use a Financial Power of Attorney for?

One of the most important reasons for making a financial power of attorney is that it helps to ensure that if the time comes, someone is available to make financial decisions for you. He or she would step in and ensure matters, such as bill payments, are taken care of until you are able to do so again. 

A financial power of attorney also gives you the power to choose someone to handle your affairs and not the court. If you fail to designate someone, there could be arguments in your family regarding who should handle your business. If the argument ends up in court, the judge could appoint someone you would have been opposed to. 

If your family has to go to court to ask for a conservator to be appointed, it can prove to be costly. Not only will your family face attorney's fees, but there are court fees that are connected to obtaining conservatorship.

What Challenges Can You Face?

Although a financial power of attorney is important, there are issues that can arise from one. One of the most troublesome is the idea that the power of attorney can be abused and lead to a loss of control in the future for you. Fortunately, there are steps you can take to protect yourself. 

For instance, choose an agent who has a history of behaving financially responsible. You also need to select someone who you know is capable of acting in your best interests in an honest manner. 

As an added measure of protection, you need a strong second and third backup agent. In the event that your first choice is unable to manage your affairs, you want to ensure that you have a say in who is then able to take care of your finances. 

You also need to ensure that the financial power of attorney is specific to your needs. Never sign a standard financial power of attorney because it might not provide the checks and balances needed to prevent abuse of your finances. For instance, if you own a business, you need to be detailed in what the agent is and is not allowed to do with your business.