Planning for your future includes considering the possibility of your incapacitation. A legal document, known as a power of attorney, allows you to designate one or more individuals to take care of a variety of responsibilities if you are unavailable or incapable of performing these on your own. The details you include in your power of attorney document will help define the responsibilities and limitations this written instrument allows.
Your will allows you to provide instructions regarding your assets. This document may provide a variety of instructions including the division of personal property such as real estate, cash, personal belongings and stocks. Although the agent you list in your power of attorney may perform a variety of tasks, your agent can’t create or change your will. A power of attorney ends upon your death; a power of attorney document is not a substitute for a will.
Powers of Attorney
You can use a power of attorney for a variety of purposes. This document designates an agent, or attorney-in-fact, to perform certain tasks such as buying and selling property, filing your tax returns, managing your bank accounts and signing contracts. You can choose what tasks you allow your agent to perform, as well as provide a time limit for the effective term.
Read More: Power of Attorney Rules
As in other areas of estate planning, state laws may vary in the ways they govern an agent’s actions. While your agent cannot create or revise your will, some jurisdictions allow your agent to create or amend trusts while you are living. Your agent may also have the authority to transfer money into your trust.
When drawing up a power of attorney, choose your agent carefully. The responsibility you give to your agent depends on your individual wishes. Clearly define what responsibilities you want your designated agent to complete, as well as providing clear instructions on the limitations you wish to impose. Some individuals choose to elect more than one agent, sometimes listing their children or closest friend and attorney to co-manage the decisions. While electing more than one agent may allow several individuals to share the responsibilities, this action can also lead to conflicts if the agents disagree on necessary procedures and actions.
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