In California, a “financial power of attorney” is a document you can use to give someone permission to manage your money and property and make decisions on your behalf.
Choosing someone to manage your finances
Whoever you choose to handle your finances through your power of attorney is known as your “agent.” If this person steps in because you aren’t able to manage your finances, then you’ll depend on your agent to keep things on the right track for you.
Most people choose a family member such as a spouse or domestic partner for the job, but you might also consider naming an advisor or someone else who you can trust.
Not only do you need to trust them personally, but also ask yourself whether you can trust their judgment because they’ll be handling your finances. For instance, will this person be responsible and reliable enough to carry out your daily tasks? What’s more, you may want to name a back-up agent in case your first choice is no longer available.
How much power will you give your agent?
So exactly what does a power of attorney let your agent do? How much (or how little) your agent can do will depend on what’s included in your power of attorney document. It’s all up to you, but you can only make good choices if you really know and understand the options.
You don’t want to make the mistake of using a generic power of attorney form that doesn’t capture your wishes. We’ll make sure your authorization is accurate, complete, and really reflects what you want. California law allows you to authorize many different types of actions in your power of attorney. Here are a few common examples of what you may want your agent to do for you:
● Sign contracts and other documents on your behalf
● Manage your bank accounts
● Accept your government benefits for you
● File your taxes
● Buy or collect insurance
● Write checks to pay your mortgage, medical expenses, and other bills
● Manage your property and make repairs
● Buy and sell real estate
● Manage your business
● Take steps to minimize any estate taxes that could be due when your property is inherited
● Invest your money in stocks and bonds, and oversee your existing investments
Beware of the outdated power of attorney
On her blog, Financial Planning Mastered, certified financial planner Sue Quint warns that banks and financial companies are more likely to accept your power of attorney if you update it every so often. The bank may be more likely to question the document and deny your agent access to your accounts if it’s dated too far back.
By reviewing your power of attorney, you’ll also have the opportunity to make changes and you may even decide to name someone else as your agent. We’ll help you cancel your old power of attorney and get a new one in place.
You can learn more in Part 2 of this post about how a power of attorney works. Also get information about what you can do now to protect yourself and your loved ones by speaking with an experienced estate planning attorney at San Diego Law Firm. Reach us at (619) 794-0243.
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