Planning for Incapacity: Financial Decisions

Planning for incapacity is not something that anyone wants to ever think about. However, it is part of life and you should make the necessary arrangements for the possibility of becoming incapacitated. Here are a few things to consider about financial decisions when it comes to being incapacitated.

Durable Power Of Attorney

As part of your estate planning, you will need to choose an attorney-in-fact to make decisions for you if you are incapacitated. The attorney-in-fact is also referred to as an agent. You are going to need to create a durable power of attorney document in order to grant authority to this individual. The term durable power of attorney means that the power of attorney agreement will remain in effect even if you are mentally incapacitated. Other powers of attorney will not remain in effect and will become useless once you are mentally incapacitated. Once you complete the durable power of attorney agreement, you will appoint someone to make decisions for you once you are incapacitated.

Bank Transactions

Once you have set up the durable power of attorney contract, your attorney-in-fact will be able to make financial decisions on your behalf. One of the big powers that they will have is the ability to conduct bank transactions for you. This means that they can transfer money from one account to another. They can also sign checks in your name and use the money to make purchases.

Real Estate Transactions

This individual will also be able to make real estate transactions on your behalf. This means that they could potentially sell your house or buy a piece of property in your name.


Your attorney-in-fact will also be able to handle your investments for you. If you have a sizable portfolio, they can manage the portfolio for you and make investment decisions on your behalf. They can purchase or sell securities in your name.


When you are appointing someone as your attorney-in-fact, it is critical that you choose someone whom you can trust. They are going to have a huge potential impact on your financial decisions and you want them to make the decisions that you would make. While sometimes they will make mistakes, you do not want to choose someone that would blatantly try to misrepresent your wishes. Otherwise, they could potentially bankrupt you and your estate.


When you choose someone, you need to go through some planning issues with them. Make sure that they understand exactly what your wishes are in every financial area that you can think of. For example, if you have a particular investment strategy that you want to continue for your family, you need to explain this to your agent. If you want to hold onto your property for a certain amount of time, they need to be aware of this. You also need to make them aware of your will or trust arrangements that you have already made so that they will be able to execute this if you pass away.

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