Wise incapacity planning usually includes the execution of a power of attorney.
A power of attorney is a document that appoints an agent who can legally sign checks, pay bills and make other financial decisions on your behalf, as the principality you become incapacitated by illness or an accident.
A power of attorney is also used when the principal is unable to be present to sign necessary documents.
The designated agent can be given broad legal authority or limited authority to decide the principal’s property, finances, or medical care.
FedWeek’s recent article entitled “Putting an Incapacity Plan in Place” suggests that, rather than a “regular” power of attorney, you may prefer one of the following:
A durable power of attorney can name a trusted friend, relative, or advisor to sign papers if you cannot make knowledgeable decisions.
These documents remain in effect if you become incapacitated.
Springing power is a durable power of attorney that will go into effect only if one or more doctors declare that you are incompetent or cannot perform some “activities of daily living,” such as being able to get dressed and go to the bathroom.
A springing power will not go into effect as long as you are competent.
Some financial institutions also may not accept your power of attorney because they require the use of their forms.
Send a copy of your power to your banks, brokers, and other accounts to see if there are issues. Some companies will also not recognize old powers.
Add an expiration date on the document and update it every year or two so it expresses your current wishes.
A power of attorney can also end for several reasons, such as when the principal revokes the agreement or dies, when a court invalidates it, or when the agent can no longer carry out the responsibilities outlined.
In the case of a married couple, the authorization may be invalidated if the principal and the agent divorce.
Reference: FedWeek (Feb. 1, 2022) “Putting an Incapacity Plan in Place”