If you’re like most people, you probably assume that having a will is enough to meet your estate planning goals. While that may be the case, there is also a chance that your plan will need additional components such as designating an agent under a financial power of attorney. This person can take actions on your behalf such as paying bills or selling assets if you cannot do so on your own or don’t want to do so on your own.
You remain in control
A power of attorney arrangement can be as broad or as narrow as you want it to be to meet your estate planning needs. For example, you could stipulate that your agent is only allowed to pay bills while you are in the hospital recovering from an upcoming surgery. Conversely, you could give your agent the ability to make any and all financial decisions on your behalf regardless of the state of your physical or mental health.
You never know when you’ll need your agent
Although you may feel perfectly healthy today, you can’t predict when you might hit your head and fall into a coma. You might also find yourself in a situation in which you lose mental cognition slowly as opposed to after a single event. In such a scenario, you may be declared mentally unfit to choose an agent before you know that you need one.
If you fail to appoint someone to fill this role on your own, a judge will need to do so on your behalf. It’s also important to make sure that your bank, broker or other companies that you do business with know that you have an agent. Otherwise, they may refuse to follow his or her instructions.
Adding a power of attorney to your estate plan may make it easier to ensure that your affairs are properly managed. Depending on your needs, appointing an agent may be preferable to creating a trust or taking other steps to prevent assets from being lost or seized because of a lack of oversight.