As a Newport Beach estate lawyer, I know that it can be difficult to plan for the future, especially for a time when you’re not able to make certain decisions for yourself. The idea can be tough to swallow, even if you’ve experienced it with older relatives and know of the possibilities. However, planning ahead is the key to staying in control and making life as easy as possible for your loved ones in a crisis.
If you’re planning for the time in which you’ll be unable to handle your own financial affairs, you may consider giving someone else power of attorney. That may seem easy enough, but then comes the question: which type of power of attorney? Do you want this person to have power of attorney over all your financial affairs, or just some things?
What’s a general power of attorney?
General power of attorney is the power to manage all of someone’s finances. With a general power of attorney, the principal (the person who gives power of attorney) gives the agent (the person who gets power of attorney) power over all the principal’s financial affairs, from paying bills, to managing assets, to making major purchases or payments on behalf of the principal. For example, a mother may give her daughter general power of attorney so she can pay bills, handle her retirement accounts, and collect rent from tenants in an apartment building she owns.
What’s a limited power of attorney?
A limited power of attorney is the power to manage a defined portion of a principal’s finances when that person becomes incapacitated. A limited power of attorney could be given to handle certain types of financial transactions without giving power to handle others. For example, a mother may give her daughter limited power of attorney over her bank accounts to pay bills, but leave her retirement investments and trust in her attorney’s care. A father could give his son limited power of attorney to sell his home, but not to handle any of his mutual funds.
How do I choose?
Choosing whether to give someone general or limited power over your finances isn’t a decision you should take lightly or make easily, especially if you have a lot of assets. However, even if you don’t think you have a lot of assets, it’s still wise to use caution when giving someone else power over your personal affairs. Time, ability, and skill are all factors to consider.
This is where a Newport Beach estate lawyer can be especially helpful. He or she can help you tailor a solution that’s best for your needs while helping you decide who to give power of attorney to…if at all. Naming someone as your power of attorney is a serious decision, and talking through your options with an experienced attorney can offer you confidence, clarity and peace of mind. If you’d like assistance getting started, contact our Newport Beach estate planning law firm at (949) 260-1400 to schedule a consultation.