As you create an estate plan, it’s only natural to spend most your time on your will or trust. This goes a long way in ensuring that the right people receive your assets upon your death.
While it is important to focus your time and attention on these details, here’s something you need to remember: There are other estate planning documents that are every bit as important.
A durable financial power of attorney is one such example. With this, you give another person the ability to manage your finances if you are incapacitated and unable to make decisions for yourself.
The first thing you need to do is create a durable financial power of attorney. In this, you will name a financial agent. This is the person you trust to make decisions on your behalf. He or she will be responsible for tasks such as:
- Paying your bills and taxes
- Managing any real estate assets
- Paying medical expenses
- Buying any insurance that you need
- Collecting all retirement benefits
- Operating your small business in your absence
- Selling and transferring assets when necessary
Simply put, your financial agent can do whatever you want him or her to, as long as it is in your best interest. You should outline his or her powers in great detail in your durable financial power of attorney document.
Generally speaking, a durable financial power of attorney goes into effect once you sign on the dotted line. However, you can use a springing durable financial power of attorney so that it only goes into effect if you are incapacitated.
In most cases, your durable financial power of attorney comes to an end upon your death or if you are once again able to make your own decisions.
You should now understand just how important it is to create a durable financial power of attorney. You never know what could happen in the future, so you want to protect yourself and your finances in any way possible.
Once you know how to create a durable financial power of attorney and what it can do for you, the final step is to create this estate planning document and enjoy the peace of mind it provides.