How to Choose a Financial Power of Attorney, Ep #225

What is a financial power of attorney? The financial power of attorney is a legal document where you specify individuals to act on your behalf in financial matters if/when you become incapacitated. If you become incapacitated, someone still has to pay your bills. Who is going to do it? Life must go on. If you do not have a financial power of attorney, who makes the decisions? The court. So many people do not have any estate planning documents because they think they are too young. They think they are too busy to get it done. They are worried that it is too expensive. So they do nothing. But that is the wrong decision. In this episode of Best in Wealth, I am going to walk you through answering four questions: Who will be your financial power of attorney? What financial powers do they have? When are you granting these powers? Why did you choose this person? If you do not have a designated financial power of attorney, let this episode be the first step you take toward making this important decision. Disclaimer: I am not an attorney and this is not legal advice. [bctt tweet="What is a financial power of attorney? Why do you need one? Get the important details in this episode of Best in Wealth! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] Outline of This Episode [4:54] What is the financial power of attorney? [7:41] Question #1: Who will be your financial power of attorney? [9:18] Question #2: What financial powers do they have? [11:31] Question #3: When are you granting these powers? [13:24] Question #4: Why did you choose this person? Who will be your financial power of attorney? For most people, it is your spouse. But what if you are not married? Who can you trust? Perhaps a sibling, friend, or other relative? You need to put a lot of thought into this decision. These are the people who will handle your finances—you better trust them. If you have already designated a financial power of attorney, review the document to remind yourself who it is. What financial powers do they have? Are you giving this person financial powers for everything or just some things? Can you trust them to make trades in your retirement account(s)? Can you trust them to write checks? What about changing beneficiaries on your IRA or revocable trust? Will they collect rent on your behalf? Can they sell your car? When you see an attorney, they will give you a list of what is standard AND a list of what is not. Maybe you will only give this individual financial power of attorney for the standard list. If you already have a designated financial power of attorney, review what powers you have granted to them. [bctt tweet="Do you have a designated Financial Power of Attorney? What financial powers do they have? Find out why it matters in this episode of Best in Wealth. #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] When are you granting these powers? Generally, you grant financial power of attorney to someone in two situations. The first is when you become incapacitated. But the power of attorney has to prove to the courts that you are incapacitated. So what is your definition of incapacitated? Is it spelled out in your document? Being incapacitated can be a gray area. Some people grant financial power of attorney immediately so their financial power of attorney does not have to prove incapacitation. But you have to trust that person with your life. Question #4: Why did you choose this person? If your spouse is no longer around, how do you choose who will handle your financial matters? You might list both of your siblings so you do not hurt...