To many people, the thought of creating an estate plan means making a will that indicates what will happen to their assets after they die. However, other decisions and documents may also be part of developing a full estate plan.
One thing people may want to consider is appointing another person to manage their finances while they are still alive. This may be important in the event of an accident or other event that renders them unable to take care of matters on their own.
The durable power of attorney
As explained by SmartAsset, a power of attorney grants essential rights and responsibilities to a third party. The agent, or power of attorney, may make financial decisions on the part of the person who establishes the PoA. This may include purchasing or selling assets, paying creditors, managing investments and more.
A power of attorney may be set up to be effective immediately or only once the person reaches a point where they may no longer be capable of managing their own money. The latter is called a springing power of attorney and the former is called a durable power of attorney. The durable power of attorney becomes effective as soon as it is signed. It may last for a set time or until the person dies.
Choosing a PoA agent
Forbes indicates that selecting an alternate power of attorney agent may be wise in the event that the first person be unable to carry out the duties at some point. Other people find naming dual powers of attorney provides a sense of security as a means of preventing fraud or abuse of power.