Power of Attorney: Know What You're Signing Over

If you are considering signing over power of attorney to someone, you will want to make sure that you fully understand what you are doing. Finding out exactly what you are signing over can help you avoid any complications or problems in the future. Here are the basics of power of attorney and what it means for your financial future.

Power of Attorney

Delegating power of attorney to another individual is basically authorizing her to make decisions on your behalf. You are going to allow her to use her own judgment to make important decisions that could potentially impact you or your beneficiaries. This is a commonly used tool in the area of estate planning in the United States.

What Your Agent Can Do

When you provide power of attorney to another individual, she can make many important decisions for you. For example, she will be able to purchase and sell property for you. She will be able to handle bank transactions and transfer money from your accounts to other accounts. She will be able to file tax returns for you. She can buy or sell stocks or other investment securities on your behalf. She can even get into your safety deposit box at the bank if she wants. She can set up contracts on your behalf and even run your business for you if you are unavailable to do so. 

Choosing a Power of Attorney

Because of all of the things that your agent can do with power of attorney, it is essential that you choose the right person for the job. You should spend a great deal of time and care when selecting an agent to represent you. Most of the time, you will want to choose a trusted family member to handle this responsibility for you. If you have a business associate whom you can trust with your life, you might consider her for the job also. Regardless of whom you choose, it needs to be someone to whom you can trust your entire financial well-being. Otherwise, you could be severely taken advantage of with the power of attorney arrangement. Many individuals have used this power to devastate others financially.

Health Care Power of Attorney

Another type of power of attorney involves health care. With the health care power of attorney, you are going to be giving someone the power to make decisions regarding your health. If you are incapacitated, someone is going to have to make important decisions regarding your life. For example, if you are going to have to stay on a respirator, this person could potentially decide to pull the plug if she thinks it would be in your best interest. This means that you are essentially putting your life in the hands of someone else. The person that you choose for your health care power of attorney privileges does not necessarily have to be the same person who handles your financial transactions if you are unable to do so.

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