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Financial Power of Attorney:
Who Needs One?
By Sandra Ray, Staff Writer
Many people feel nervous at the
thought of a power of attorney. It can be intimidating
to consider giving another person or agent the authority
to make financial decisions on your behalf.
There are valid reasons to consider a power of attorney
if the need arises. In layman’s terms, a power of
attorney is a legal document that allows someone (an
individual or an entity) to conduct business on your
behalf. There is more than one type of power of
attorney. These include both financial and medical.
A medical power of attorney should contain specific
information about who can make medical-related decisions
when someone becomes incapacitated and cannot make these
decisions for himself or herself. Experts generally
agree that financial powers of attorney should not
include medical information.
A financial power of attorney can be either durable or
nondurable. It is important to know the difference and
when you may need one or the other. Most people consider
durable powers of attorney when there is a chronic
illness involved or a date in the future when it might
be foreseeable that illness can be disruptive to
someone.
Financial Areas to Consider:
Regardless of the type of power of attorney chosen,
there are broad areas of consideration concerning
finances. These include (but may not be limited to) the
following types of financial transactions:
Each state allows for fairly standard rights to be
allowed through a power of attorney, although you want
to do specific research in your state if there are
unusual financial circumstances to consider.
Nondurable Power of Attorney:
A nondurable power of attorney is generally used for
limited transactions. For example, if someone needs to
grant authority for a single transaction, such as a
stock trade, a nondurable power of attorney would be
most applicable. Another reason to use a nondurable
power of attorney would be if someone were traveling and
unable to conduct business from home. Some states refer
to this type of power of attorney as a special power of
attorney.
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