When you think of estate planning, you may think of writing a will, but there are other factors in a plan that can be useful — even during your life.
One of these important documents is a power of attorney.
A POA grants authority to a trusted person to manage your finances and legal matters if you become unable to do so. Without this designation, your family must seek the court’s permission to access your accounts, pay your bills and purchase things you need. You may think you can wait until it is absolutely necessary before signing this power away, but you cannot sign any legal documents unless you are of sound mind. You may wait until it’s too late.
Perhaps the most common hesitation people have about the POA is that they don’t want to relinquish control of their assets. Signing a durable POA immediately grants your agent access to your accounts. You may have heard stories of people who lost everything to an unscrupulous POA agent. This is why it is critical to choose your agent carefully and without sentimentality.
Designating an inappropriate agent may be the most common and dangerous mistake you can make, but you will also want to avoid these other errors:
- Failing to learn as much as you can about the power of attorney limitations and advantages
- Choosing the wrong kind of power of attorney for your circumstances
- Overlooking the benefits of a health care POA
- Downloading a generic POA document from a website
These online documents may save you money, but you run the great risk that they are not adequate for your needs and do not comply with Connecticut laws. They also frequently contain vague language that may not stand up in court if someone challenges your agent or your agent misunderstands the scope of his or her authority. For this reason, it is an excellent idea to consult with an estate-planning professional who can answer your questions and alleviate your concerns.