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What is a financial power of attorney?

On Behalf of | Jan 2, 2024 | Estate Planning

A power of attorney for finances allows individuals to designate a trusted person to manage their financial affairs. This arrangement is critical when one might become incapacitated and unable to make decisions independently. 

These designations work closely with other aspects of the estate plan to ensure the creator’s affairs are in order. 

Power of attorney for finances

A financial power of attorney grants a designated individual the authority to handle financial matters on behalf of the person making the power of attorney. Their duties can include managing bank accounts, paying bills, investing and dealing with property transactions. 

There are several key benefits of a financial power of attorney in estate planning. It ensures that the affairs of the creator are handled swiftly if they become incapacitated. It can be fully customized to fit specific circumstances. Creators can specify duties for the individual they name. The powers can be as limited or as broad as the creator feels comfortable with.

Totten trusts

A Totten trust, also known as a payable-on-death account, designates a beneficiary for a bank account or other financial accounts. Totten trusts are easy to set up and can be changed at the creator’s discretion. When the account holder dies, the assets in the account pass directly to the named beneficiary. Assets governed by a Totten trust bypass the probate process.

The powers of attorney for finances and Totten trust are only part of a comprehensive estate plan. All adults should take the time to get everything in order so their loved ones have a plan to follow. Working with someone familiar with these matters can make the process easier.