What’s a financial power of attorney? How is it different from a will? What if I become disabled or incapacitated? Do I need a power of attorney? Does it go into effect immediately or only after I become disabled or incapacitated?
Every adult needs 4 basic estate planning documents: (1) a will (and/or trust), (2) a living will, (3) a durable financial power of attorney, and (4) a durable medical power of attorney.
- A financial durable power of attorney authorizes a person to act on your behalf to make financial decisions for you while you are alive, but unable to act, such as paying bills, depositing monies into bank accounts, transferring monies between accounts, and related financial transactions. The person is called your attorney in fact and is your agent. State law provides some standard provisions, and we can tailor optional powers to allow your attorney in fact to make gifts, sell your house with your spouse, establish trusts, or similar things.
- A Will only applies after you die, but a financial power of attorney only applies while you’re alive.
- The “durable” part means that the power survives your disability or incapacity – if you’re sick, in a coma, or out of town, the power of attorney works, so long as you’re alive.
- Yes, you need a power of attorney if you’re an adult, have bank accounts, a house, a business, or other assets, travel (especially internationally), or receive income or have bills that may need to be paid in your absence.
- Powers of attorney can be “springing” or “immediate,” which is about the trigger time: an immediate power of attorney starts when you sign the document (so your agent has full power to act for you starting when you sign), while a springing power of attorney requires two doctors to certify you’re incapacitated before your agent can act on your behalf (adds an extra layer of accountability, but can also delay things badly if a medical or financial decision needs to be made immediately).
My law firm, Johnson Law KC LLC, can help you get a financial power of attorney and the rest of your estate plan done quickly and affordably. Call (913.707.9220) or email us (email@example.com) to schedule a free, convenient consultation.
(c) 2015, Stephen M. Johnson, Esq.
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