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Mandated time away or a medical emergency can leave you debilitated and unable to control your finances on your own, which can create an uneasy feeling about the future during your bout of illness or necessary absence.
But it doesn’t have to be that way with proper planning, which a financial power of attorney (FPOA) can help you do.
What is an FPOA?
An FPOA is simply a legal form that typically accompanies your will, declaring who you want to act as your legal representation to make money, decisions, such as bank deposits and collecting insurance benefits, and more on your behalf, should you become unable to.
How Does an FPOA Work?
An FPOA is generally incorporated to help safeguard your financial wishes in the event you need to make an urgent decision regarding your money but are unable to due to a sudden severe illness or accident.
This way, you maintain control over your finances even during unpredictable situations that can cause you to fall short of meeting your long-term goals.
It also protects you against potential legal battles that may ensue over who will manage your funds should you become out of commission.
What is a Durable Power of Attorney, and When Does it Take Effect?
A durable power of attorney (DPOA) is an agent-of-attorney that acts on your behalf in the event you become seriously ill up to the point you are unable to make conscious decisions on your own.
However, you can also choose to have the person’s services become effective immediately, such as if you are away from home and a financial decision needs to be made while you’re away.
Why Do You Need a DPOA?
In short, if you do not have a DPOA and you become incapacitated, the court will appoint someone you do not know to act as a financial agent for you, which means you risk your finances and assets not being handled the way you want to.
It also helps prevent just anyone from being able to pry into your finances and assert their own will over yours in your absence.
Therefore, to help guarantee their hard-earned funds stay under their control at all times, many people establish a financial power of attorney, so they always have a trusted appointee of their finances on hand when they need it the most.
How to Create a Durable Financial Power of Attorney
To establish a DPOA, first, complete a legal form detailing who you want to be your financial agent and which decisions you want them to make.
The form then has to be signed in front of a notary public and/or witness and then provide your agent with a copy. You should also keep on hand in your own files.
How to Revoke a DPOA
Provided you are deemed as having the mental capacity to do so, you can complete revocation of power of attorney form, indicating you no longer want your current appointee to act as your DPOA, and then have it witnessed, which enables you to assign a new power of attorney to serve in their place.
In closing, if you want peace of mind knowing a loved one of your choice will step in to handle your finances in your misfortune, then speak with your estate planning professional about how to set up an FPOA or DFPOA for you. For more information on the above, you can reach out to reputable places like GoodTrust.