Why would you need a financial power of attorney?

When people think of a power of attorney, they often start by considering a medical power of attorney. This document legally gives someone else the ability to make healthcare decisions for you. If you become incapacitated, this is very helpful because they can work with your medical team so that you get the right type of care.

But you can also get a financial power of attorney. This is sometimes referred to as a legal power of attorney. Why would you need to use this document as well?

Finances and real estate

Often, the answer is just because financial decisions still need to be made, and this could include real estate decisions. If you’re incapacitated, you cannot take some of these important steps yourself. The power of attorney makes it so that someone else can step in on your behalf.

For instance, say you are in the middle of selling your home when you become incapacitated. If you have a power of attorney, the agent that you chose can still facilitate this sale, which may be very helpful if the money is needed to pay for your medical care.

There could also be basic financial steps that they need to take, like transferring money from one bank account to another or paying property taxes and income taxes on your behalf. Usually, you are the only person who has access to these funds. But the power of attorney allows your agent to access these accounts and make transfers so that everything goes smoothly until you recover.

Creating an estate plan

Powers of attorney can be a helpful part of a complete estate plan. Be sure you know what steps to take to get yours in place.