Estate Planning Essentials: Power of Attorney for Property
Mary sustained a traumatic head injury that left her mentally incapable. In this situation, she would be unable to manage her own financial affairs.
While Mary was recovering, her family needed to ensure the rent on her apartment continued to be paid. They also hired a private nurse. Her family tried to access her savings to pay for these. The bank asked for a Power of Attorney for Property. Unfortunately, Mary did not have one.
What is a Power of Attorney for Property?
A Power of Attorney for Property allows you to appoint someone to manage your financial affairs if you become incapable. If Mary had a Power of Attorney for Property, he or she would be able to seamlessly assume responsibility while Mary recovered.
The law does not automatically appoint your spouse or other relatives to make decisions about your property when you are incapable.
Instead, your loved ones will likely have to apply to become your legal guardian to access money and manage your affairs. This can be a long and expensive process, especially if the selection is disputed. For this reason, you may avoid considerable upset amongst your loved ones if you engage in proper and informed planning prior to any catastrophe happening.
You can personalize your POA for Property
You have a great deal of flexibility when drafting your POA for Property. For instance, you may want to consider including directions regarding:
Wedding gifts to be given on your behalf
Funding for a child’s education
Directions to sell a property, invest funds or dissolve a business
Payment for retirement or home care
Access to your accounts for any other family members
In Mary’s case, she could have stipulated that her POA for Property sell off some of her assets to fund any long-term care she may require.
Who will you appoint?
For property and financial decisions, the person you name must be at least 18 years of age. The person should be trustworthy, have a sound understanding of financial management, and be willing to assume the responsibility. If you change your mind about who you want to appoint, you can change your POA for Property as long as you are still mentally capable at the time.