Understanding financial power of attorney is essential for performing your duties well.
A financial power of attorney is a document established by an estate planning lawyer which allows an agent to act on the principal’s behalf. These powers typically include paying the principal’s bills, accessing their accounts, paying taxes, and buying and selling investments. The agent assumes the principal’s responsibilities and can act for that person in all areas detailed in this document. The agent with financial power of attorney is responsible for the following primary tasks and can receive necessary guidance and assistance from experienced estate planning professionals at The Millman Law Group.
What To Do First
The first step is to review the power of attorney document to see what the principal has given you authority over. The next step is to list the principal’s assets and liabilities. The following needs to be found:
- Brokerage and bank accounts
- Tax bills
- Retirement accounts
- Utility, phone, cable, and Internet bills
- Mortgage papers
- Insurance premium invoices
Look at the principal’s spending to notice any recurring expenses. If the principal is older than 72 and has given you the power to manage their retirement plan, you must make the required distributions (RMDs). If your principal manages their finances online, contact the financial institutions to establish that you have the power of attorney so you can access those accounts.
Guard the Principal’s Assets
One of the key responsibilities of a financial power of attorney is to protect the estate and assets of the principal. Make sure their home is secure. If your principal will likely be incapacitated for an extended time, you may stop or pause services like newspaper delivery. Look out for family members trying to take ownership of the property.
Pay Bills
Monitor your principal’s bills and credit card statements to look for fraud. You may also temporarily suspend credit cards you will not need to use on the principal’s behalf. However, remember that they may have set up monthly bill payments by credit card, so be sure not to suspend any cards that have payments scheduled.
Pay Taxes
Many financial powers of attorney allow the agent to pay the principal’s taxes. If you have this power, you are responsible for filing and paying taxes during the principal’s lifetime. If the principal dies, the executor of their will is responsible for preparing those final taxes.
Keep Records
It is always best to track the expenditures made on your principal’s behalf. This helps demonstrate that you are upholding your duties and acting in the principal’s best interest. It can also be helpful for reimbursement of expenses if applicable.
Always Act in the Principal’s Best Interest
You may have explicit directions for what the principal wants for their finances. However, if you are in a situation where you don’t have a direct answer for what they want, consider what is in their best interests. You may also contact the principal’s attorney, who prepared the power of attorney, for advice or guidance.
Estate Planning Made Easy With Millman Law Group
Millman Law Group, PLLC is rare because it’s one of the only law firms that offer life planning in South Florida. From life care planning to the preparation of detailed estate plans, Millman Law Group has committed to serving Floridian elderly communities in Boca Raton, Palm Beach County, Ocean Ridge, Hillsboro Beach, and many other areas since 2018. Our dedicated team also specializes in special needs trusts and catering to any age demographic because we know for certain it’s never too early to start preparing you and your family for your future. For the latest news in estate planning and elder care law, follow us on Facebook, Twitter, Linked In, and Pinterest. You can also contact us at 561-463-6480.