Creating an estate plan is essential as it is a good way to ensure that a person’s assets are distributed after their passing. However, many people only focus on trusts and wills to fulfill this purpose, but more is needed. It is crucial to ensure that you have a well-rounded estate plan that does much more than just direct assets. One essential part of a good estate plan is the durable financial power of attorney. This legal document enables you to appoint trusted individuals and give them the power to manage your finances and make decisions for you when you are unable to do so because of ill health or some other incapacity. A durable financial power of attorney is an essential tool in an estate plan.

What is a Durable Financial Power of Attorney?

A good financial power of attorney is a document that grants authority to an individual to make decisions on your behalf when you are unable to make them on your own. The difference between an ordinary power of attorney and a durable financial power of attorney is that an ordinary power of attorney becomes invalid if you become incapacitated; however, a durable power of attorney remains in effect even when you cannot make decisions on your own. A knowledgeable estate planning attorney in Maryland can aid you to create a durable financial power of attorney aligning with your specific needs.

The Significance of Having a Durable Financial Power of Attorney in Your Estate Plan

For a lot of people, the durable financial power of attorney is a crucial part of their estate plan, and the following are the reasons:

Maintaining Control Over Financial Decisions

Suppose you do not have a durable financial power of attorney and you become incapacitated. In that case, you will be unable to make any decisions. Your family will have to go to court to gain control over your finances. This can be a lengthy and expensive process and a hindrance when quick decisions are needed. With a durable financial power of attorney, your agent can make decisions on your behalf right away.

Ensuring Financial Stability and Avoiding Legal Battles

When you have a durable financial power of attorney, there is a higher chance that your finances will be addressed or managed. Your agent can immediately act, pay bills, and manage finances. Giving this power to an agent is extremely useful, especially when many people depend on you to make your payments.

Protecting Your Privacy

If you do not have a durable financial power of attorney, your financial affairs risk becoming part of a court proceeding. This means that all of your personal information may become part of the proceedings and could be discussed in court. With a power of attorney, however, all of your financial matters will remain private. Privacy is important to most people; you can have it just by having a durable financial power of attorney.

Types of Durable Financial Powers of Attorney:

There are a couple of major kinds of durable financial power of attorney. The first is known as immediate power of attorney. As the name suggests, this power of attorney becomes effective as soon as you sign it. Your agent will be able to manage your finances regardless of your health status. This is a suitable option if you are willing to share some responsibilities with your agent.

The second type is a springing power of attorney, which only comes into effect if you become ill or incapacitated. You will retain full control over your finances until your doctor certifies that you can no longer manage them on your own. This type of power of attorney is generally used by people who want to maintain control over their finances but also feel safe that their finances will be in good hands if something unexpected were to happen.