Many people believe that a power of attorney is only useful if you encounter incapacitating medical issues. However, creating a power of attorney during your estate planning may help you in other more common situations, such as extended overseas travel.
Wills, power of attorney and estate planning
A power of attorney is a legal document that transfers the power to act on your behalf to another person if you are unable to act on your own. Many people believe that their spouse will be able to step in and take control of their finances if they lose the ability to do so themselves. However, if these accounts are not in a joint name this may not be the case.
This document should form a major part of your estate planning. However, many people create a will without making a power of attorney.
Creating a power of attorney is better done early as it cannot be made if a person's mental capabilities or judgement is impaired. To understand the process, it is important to talk to an experienced wills and estates lawyer.
Power of attorney: When will it come into effect?
Typically, a power of attorney comes into effect when someone is no longer in a position to govern their financial affairs.
An enduring power of attorney is your best form of protection in cases where you become incapacitated for a long period of time. An ordinary power of attorney may lapse and put your financial affairs at risk.
However, there are many situations whereby an ordinary power of attorney can help keep your financial affairs in order.
For instance, if you are planning on an extended trip overseas and you run a small business, there may not be anybody authorised to pay the company's bills. By creating a power of attorney, you can nominate someone to have the legal ability to manage your financial situation while you are outside of Australia.
A power of attorney is not a complete transfer of financial accounts to someone else. Instead, it is a directive that gives your attorney legal authority to govern your financial situation in accordance with your wishes.
Additionally, you can limit their power and set a time limit for when the powers will cease.
If you would like to know more about powers of attorney, contact a team of experienced wills and estate lawyers. Talk to Craddock Murray Neumann Lawyers today and find out how they can help you with your estate planning.