If you become incapacitated, does someone you trust have the authority to handle your financial and medical decisions?
Did you answer “no”? Then you may want to talk to your legal advisor about drafting a power of attorney.
A power of attorney (POA) is a written document that lets a person you choose manage your finances and make certain other decisions for you in the event you are unable to make them for yourself. These decisions can include opening and closing bank accounts, signing checks, filing tax returns and handling your investment portfolio.
Here are answers to three common questions about POAs:
- Who should I give power of attorney to?
Pick someone you trust who is capable of making sound financial decisions—and who is willing to do so.
You may also want to consider choosing a second person who meets the same qualifications as a backup.
- What powers do I want to give the person who holds my power of attorney?
You can grant limited or general powers. A limited power of attorney allows your designated person to take actions that are specifically listed in your POA. A general power of attorney allows the person you have chosen to act on your behalf in all matters.
- Do I need a separate power of attorney for health care?
It depends on where you live. Each state has its own laws regarding who can make medical decisions for you when you are incapacitated. Some accept a traditional POA for both financial and health care matters, while others require a separate POA for health care.