How to Choose a Financial Power of Attorney, Ep #225

What is a financial power of attorney? The financial power of attorney is a legal document where you specify individuals to act on your behalf in financial matters if/when you become incapacitated.

If you become incapacitated, someone still has to pay your bills. Who is going to do it? Life must go on. If you do not have a financial power of attorney, who makes the decisions? The court.

So many people do not have any estate planning documents because they think they are too young. They think they are too busy to get it done. They are worried that it is too expensive. So they do nothing. But that is the wrong decision.

In this episode of Best in Wealth, I am going to walk you through answering four questions:

1. Who will be your financial power of attorney?
2. What financial powers do they have?
3. When are you granting these powers?
4. Why did you choose this person?

If you do not have a designated financial power of attorney, let this episode be the first step you take toward making this important decision.

Disclaimer: I am not an attorney and this is not legal advice.

Outline of This Episode

• [4:54] What is the financial power of attorney?
• [7:41] Question #1: Who will be your financial power of attorney?
• [9:18] Question #2: What financial powers do they have?
• [11:31] Question #3: When are you granting these powers?
• [13:24] Question #4: Why did you choose this person?

Who will be your financial power of attorney?

For most people, it is your spouse. But what if you are not married? Who can you trust? Perhaps a sibling, friend, or other relative? You need to put a lot of thought into this decision. These are the people who will handle your finances—you better trust them. If you have already designated a financial power of attorney, review the document to remind yourself who it is.

What financial powers do they have?

Are you giving this person financial powers for everything or just some things? Can you trust them to make trades in your retirement account(s)? Can you trust them to write checks? What about changing beneficiaries on your IRA or revocable trust? Will they collect rent on your behalf? Can they sell your car?

When you see an attorney, they will give you a list of what is standard AND a list of what is not. Maybe you will only give this individual financial power of attorney for the standard list. If you already have a designated financial power of attorney, review what powers you have granted to them.

When are you granting these powers?

Generally, you grant financial power of attorney to someone in two situations. The first is when you become incapacitated. But the power of attorney has to prove to the courts that you are incapacitated. So what is your definition of incapacitated? Is it spelled out in your document? Being incapacitated can be a gray area. Some people grant financial power of attorney immediately so their financial power of attorney does not have to prove incapacitation. But you have to trust that person with your life.

Question #4: Why did you choose this person?

If your spouse is no longer around, how do you choose who will handle your financial matters? You might list both of your siblings so you do not hurt someone’s feelings. But what if both people have to sign something every single time something needs to happen? What if both signatures need to be on every rent check? That sounds pretty inefficient, right?

But it is also okay to designate multiple people. Someone can handle day-to-day expenses and someone else can handle your investment decisions. You cannot worry about whether or not someone’s feelings are hurt. You need to choose experts in each area whenever possible. Why did you choose them? 

Connect With Scott Wellens

• Schedule a discovery call with Scott
• Send a message to Scott
• Visit Fortress Planning Group
• Connect with Scott on LinkedIn
• Follow Scott on Twitter
• Fortress Planning Group on Facebook

Subscribe to Best In Wealth

Audio Production and Show notes by
PODCAST FAST TRACK
https://www.podcastfasttrack.com

Podcast Disclaimer:

The Best In Wealth Podcast is hosted by Scott Wellens. Scott Wellens is the principal at Fortress Planning Group. Fortress Planning Group is a registered investment advisory firm regulated by the Securities Act of Wisconsin in accordance and compliance with securities laws and regulations. Fortress Planning Group does not render or offer to render personalized investment or tax advice through the Best In Wealth Podcast. The information provided is for informational purposes only and does not constitute financial, tax, investment or legal advice.

About the author, Scott Wellens

Scott Wellens, CFP® is an investment advisor and founder of Fortress Planning Group. After earning his Bachelor of Science degree from the University of Wisconsin-Oshkosh, Scott quickly ascended to become a Vice President of North American Sales at a major regional provider of telecommunications infrastructure. While financially successful in this role, Scott searched for ways to pursue his passion related to financial literacy and providing financial freedom for both his own family and others. During his search, Scott became curious about the significant gap he found in the financial services sector: he was unable to find a comprehensive financial planner that maintained a family stewardship lens without being attached to financial products. Scott decided to fill that gap by creating his own planning firm that maintains a strong passion for comprehensive, unbiased wealth planning that is genuinely client-centered.

Scott resides in Menomonee Falls, WI with his family. He is the father of three active and independent daughters who keep him on his toes. Scott is an active community member, serving on the Hamilton Education Foundation Board, serves as a Dave Ramsey Financial Peace facilitator and leads the All Pro Dad’s group at their local elementary school. Scott enjoys spending his free time visiting state parks with his family, reading, and watching the Milwaukee Bucks and the Green Bay Packers win ball games.

• Links:
• Website