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Why a power of attorney is important part of an estate plan

There are many facets of the estate planning process. One of the most important estate planning tools for Georgia residents is called a “power of attorney.” A power of attorney allows another person to manage your financial affairs if you become unable to do so.

A power of attorney is granted to an “agent” or “attorney in fact” who is allowed to sign your name and act in your best interests and wishes. A power of attorney is essential to plan for health crises or accidents that may incapacitate you. A power of attorney and a will can also ensure that your financial wishes are clear, thus minimizing the risk of potential familial strife.

There are two main powers of attorney relevant for estate planning purposes. The “durable power of attorney” is immediately effective and allows a lawyer or other agent to sign your name and act on your behalf even if you are not incapacitated. This power of attorney is a convenient way for an attorney to represent you when you are traveling or otherwise unable to execute documents on your behalf.

The second power of attorney type is the “springing power of attorney” which only authorizes an agent to act on your behalf after your incapacitation. This power of attorney is convenient for Georgia residents who want complete control over their affairs as long as they are capable of managing their affairs.

Compensation for agents varies. Friends and family members may act as agents for free, but a financial institution or lawyer who has a power of attorney may charge a percentage of an estate or hourly rate depending on local and state laws. A power of attorney is only one part of a holistic estate plan which an experienced estate planning lawyer can establish to help you best manage your financial affairs.

Source: CNN Money, “Why should I assign power of attorney?”