Use of a financial power of attorney in preparing for the future

Statistics provided by the Alzheimer’s Association suggest that aging adults 65 and older in Ohio and across the country stand a one in nine chance of getting Alzheimer’s disease. Taken together with other ailments such as dementia and disabling accidents that could render them unable to take care of their finances, older adults might wish to proactively assign that responsibility to someone else in case they were ever incapacitated.

For those who want to plan ahead, a financial power of attorney could offer the peace of mind that knowing their finances will be handled in accordance with their wishes would bring. It could also save time, as seeking a court’s permission to handle an incapacitated person’s financial affairs would not be required.

The person who puts a financial power of attorney in place, also known as the principal, grants the management of their financial affairs to another person, known as the agent. The powers granted by the principal to the agent is set forth in the document for power of attorney, and the agent will have a fiduciary duty to act in the best interests of the principal in the conduct of their financial affairs. An agent’s financial duties may include managing investment and banking accountings, managing property owned by the principal, and paying their bills.

Unfortunately, some agents fail to honor their fiduciary duty to the principal under the power of attorney. For this reason, a person considering a financial power of attorney should not feel that they are being forced by the proposed agent to sign the document. The Financial Industry Regulatory Authority provides assistance to those who may have concerns about power of attorney abuse.

Although there are different types, all powers of attorney expire upon the death of the principal. For this reason, those wishing to provide clarity on what they would like to happen after their death might benefit from engaging the services of an attorney to develop a plan that addresses all aspect of their estate.