Ask Yourself, Who Do You Want Involved In Your Legacy?
If you want to receive a well thought out will-planning questionnaire, containing vital questions intended to help you with the first step to creating a will, go to www.TheFinancialToolboxBook.com. This tool will equip you with the questions you need to consider before you meet with a lawyer.
Why Is Your Power Of Attorney (POA) More Important Than Your Will?
By appointing a power of attorney you legally choose someone to act on your behalf and in your best interest if you cannot do so due to incapacity. While you are alive, some will correctly argue that you need to have your POA even before you have any assets. I often suggest this is a more important document than a will if for no other reason than it is triggered while you are still around. Once you sail off to that great beyond, it is nullified and your will takes over. Essentially your POA can do almost everything with your property or financial affairs that you can.
Tip: Do you want to bulletproof your estate plan? Get your POA in order.
A. Who will pay your bills, taxes, manage your investments, property, bank accounts if you become incapacitated? This is what the person you choose for your POA for property will do.
- The continuing POA for property (CPOA) covers your finances and property, allowing the person to act for you even if you become mentally incapable. It is the one most used for estate planning. You should choose this one if, like most grantors, you want your attorney to make decisions for you after you have lost the ability to make important decisions.
- The non-continuing POA for property (NCPOA), also known as a general property POA or an ordinary POA, will be invalidated if you become mentally incapable, so it is valid only as long as the donor is capable of managing their own affairs. People use this to have someone care for their financial affairs while they are on vacation for an extended period.
TIP: You can have your POA documents held by a third party and released only in certain conditions.
Your goal should be to have an enduring or continuing POA come into effect either as soon as you sign it or if you become incapacitated and cannot govern, conduct or take care of your affairs.
B. Who will handle or decide where you live, what you will eat, and what health care you will get if you become incapacitated? The person you chose as a POA for personal care will decide that for you.
A POA for personal care (POAPC) is different from a power of attorney for property. A POAPC can only be used when you are mentally incapable of making your own personal care decisions. If you do not have a POAPC and you become incapacitated, then a family member appointed by the court will make decisions affecting your health. If you have no family, the government steps in.
Do not assume you have automatic POA for your spouse, or for your adult kids. You do not. Everyone 18 years and older needs to prepare one for themselves.
There are numerous horror stories about what happens if you don’t have a POA in place and you become incapacitated.
Your power of attorney needs to be these five things:
- Someone you trust.
- Someone who is reliable.
- Someone who is willing to commit the time to act on your behalf and is expected to be around should they need to make decisions. You don’t want to appoint a grandparent who may predecease you.
- Someone who is responsible, and knows how to manage money.
- Someone who can keep an emotional distance. They are acting on your desires, and have to be strong enough not to bend to pressures of other family members.
Be aware there are four things a POA cannot do. They cannot:
- Make a will for you.
- Change your existing will.
- Change your life insurance beneficiary.
- Transfer the POA to someone else.
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