Financial Power of Attorney

Every estate plan should include a financial power of attorney, also known as a General Power of Attorney or Durable Power of Attorney.  The "durable" aspect means that it would be effective even after a person (the "Principal") becomes incapacitated. 

The fundamental concept of any "power of attorney" is that the Principal names another person as "Agent" (also known as "Attorney-in-Fact," not necessarily an attorney as in a lawyer), to handle his or her own financial matters with respect to property not held in a trust (since a trustee handles trust property). 

It is highly recommended that an individual agent is named, followed by successor agent(s) in the event the primary agent is unable or unwilling to serve.  Co-agency is problemative since they must either act unanimously or independently and, if unanimously and the co-agents disagree, some form of tie-breaker would be needed.

Note that financial powers of attorney typically gives your agent broad powers to dispose of, sell, convey and encumber your real and personal property.  Therefore, the Agent(s) you name should be trustworthy especially with regard to financial matters and your financial well-being.  Obviously, individuals who are spendthrifts or have substance abuse issues are not good candidates.

The financial power of attorneymay become effective immediately upon signing, or "spring" into effect upon one or more events, such as doctor certification of incapacity, written instruction to the Agent, or inability of the individual to communicate.

Posted in Estate Planning

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