When we talk about giving someone a power of attorney, that simply means that you have signed a power of attorney, and in that document, you’ve appointed an agent or maybe a couple of agents, maybe a primary and a contingent. The purpose of this document is to make sure that if you’re unable to make financial decisions for yourself, you have appointed someone whom you trust to be able to make those decisions for you.
Let’s give a couple of examples. Let’s say, God forbid, that you’re in a bad car accident – you’re laid up in the hospital, maybe you’re in a coma – that’s a situation where it’s extremely helpful to have a validly executed power of attorney and you have an agent in place who can act for you. Another example might be some sort of cognitive decline – Alzheimer’s, or dementia. Some disabling illness sets in, and you’re no longer able to manage your financial affairs, but, fortunately, you’ve signed off on a power of attorney; you’ve already got somebody in place who can conduct your business and make those financial decisions for you.
There are important limitations to a power of attorney that you should discuss with a qualified estate planning attorney:
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Written by: John Mangan, JD, MBA