The truth is that none of us knows what the future holds. The best strategy is to be prepared.
One way to be prepared is to have a financial power of attorney. A financial power of attorney allows you (the “principal”) to give another person (your “agent”) the authority to act for you, and to make financial decisions for you if you are ever incapacitated.
If you do become incapacitated, your power of attorney could become the most important legal document you ever signed. A financial power of attorney can ensure that the right decisions will be made for you by the right person at the right time.
However, you should be aware that a power of attorney can be used as a tool to take advantage of you financially, or to interfere with your estate plan. For this reason, you should choose the agent for your financial power of attorney very carefully. You may also want to consider options to discourage potential financial exploitation, such as limiting your agent’s power to make gifts, naming a co-agent, or requiring that your agent report transactions to a third party.
Your power of attorney document should be specifically tailored to meet your needs and goals. It is best to avoid “one-size-fits-all documents” that you print from the internet. Your document should be prepared by a skilled estate planning attorney with your individual situation in mind.
It is a good idea to discuss your power of attorney with the family members who could be involved in your care some day. You can discuss the preparations you have made and answer any questions.
Taking the time to address these difficult issues in advance can ease the burden on your family members and promote family harmony if you ever do become incapacitated.