One of the most essential estate planning tools for individuals who are looking to the future is a good financial power of attorney.
A power of attorney enables another person to act on your behalf if something happens to you or you become incapacitated and are unable to look after your own affairs. The financial aspect of it gives that person access and authority to manage your financial accounts, pay your bills and debts, and make any financial decisions for you that are in your best interests.
How Does a New York Financial Power of Attorney Work?
Financial powers of attorney in New York are often used as individuals age, become incapacitated, or find themselves in medical emergencies. When an individual cannot make financial decisions, the family may have to seek court approval to get the authority to act on their loved one’s behalf. This is when a financial power of attorney can be critical.
Once a financial power of attorney is signed and put into effect, your designated agent has the legal right to act on your behalf. Depending on your needs, you can give your agent extensive access and power to handle finances or very specific powers. Some of those rights can be
- Paying your daily expenses
- Handling banking transactions
- Filing and paying taxes on your behalf
- Collecting and managing your Social Security, Medicare, or other government benefits
- Managing your retirement accounts
- Paying mortgage payments and taxes on your home
- Buying, selling, mortgaging, or financially maintaining other real estate properties
- Making investments on your behalf
- Buying and selling insurance policies for you
- Operating a small business you own
- Transferring assets into an already established trust
Your agent must act in your best interests at all times, maintaining accurate financial records and an accounting of everything done on your behalf. He or she must keep your legal property separate from theirs and avoid anything that may be considered a conflict of interest.
Who Can Act as Your Financial Power of Attorney?
Because the person you designate as your agent under a financial power of attorney may have extensive control over your financial dealings, you want to choose someone you trust. This may be a trusted family member or friend. But because the job can be involved, you will want to consider someone with substantial financial knowledge or will recognize when they will need outside assistance.
Most individuals are concerned about handing over their financial affairs to someone else. Although there are laws in place that punish those who mismanage the funds of others, they may still be reluctant to create a financial power of attorney.
A financial power of attorney will take effect as soon as you sign it, depending on its terms. However, if its powers are “springing,” they will not go into effect until a triggering event.
A springing power of attorney does not go into effect until a condition stated in the document has occurred. Most individuals who use springing financial powers of attorney do so considering a future event such as an incapacity. Incapacity is only considered when one or more physicians certify that the individual is either physically or mentally incapable of making financial decisions for himself or herself.
Does a Financial Power of Attorney Ever Expire?
Most financial powers of attorney are “durable,” meaning that they are valid until you die or until you revoke it. Some, however, include termination dates. Because of this, you should periodically revisit its terms with your New York financial power of attorney lawyer to ensure that it still meets your needs.
Why It’s Not Smart to Use a Financial Power of Attorney Form
Although there are multiple resources online for creating a do-it-yourself free financial power of attorney, you want to fine-tune yours to your own specific needs and ensure that it is legally thorough and binding. Because there are many issues to consider, online forms do not offer a nuanced approach. When it comes to financial powers of attorney, one size does not always fit all.
Getting the Advice of a New York Power of Attorney Lawyer
If you would like more information about financial powers of attorney and how they can be an essential addition to your estate planning tools, contact AJC Law at (201) 273-9763 or set up a complimentary consultation.