If you get very sick and do not have the physical or emotional capability to manage your own finances, do you know who will take over these responsibilities? Unless you grant power of attorney to someone, this decision will typically be left up to a judge who is probably a complete stranger.
In order to protect yourself and your financial interests, you can give someone else permission to manage these affairs on your behalf by completing a durable power of attorney. So what exactly can someone with power of attorney do?
The person to whom you grant power of attorney will be legally allowed to:
- Pay bills like mortgages, utilities, credit cards and medical expenses
- Access your bank accounts
- Invest your money
- Sell real estate and other assets you own
- Manage and submit your tax returns
If power of attorney is durable, it means that the agent will continue to have these permissions even if you become incapacitated.
Considering the access and permissions a person with power of attorney will have, it is important that this person is someone you know and trust, and can handle the financial responsibilities of the role.
It is also crucial to understand that power of attorney is only in effect until the grantor of that power passes away. Failure to recognize this could lead to some serious complications.
As discussed in this article in The Consumerist, someone with power of attorney can manage a person's affairs quite easily while he or she is still alive only to face serious challenges doing the same things after the person passes away. Further, if you have power of attorney and continue to make decisions on behalf of the deceased, you could find yourself in serious trouble and cause considerable damage to a person's estate.
Assigning durable power of attorney can be an incredibly important task. It should be done after careful consideration and with an understanding of what that legal obligation allows a person to do. Before you make any decisions regarding power of attorney, it can be wise to discuss your legal options with an estate planning lawyer.