Who will make financial decisions for you?
August 31, 2023
Financial decisions can be difficult to make. Imagine how difficult they are if you lack mental capacity, writes Peter Watson.
One aspect of estate planning is having a power of attorney for property. That allows you to select someone you trust to make those important decisions is you lack mental capacity.
Financial decisions can include paying your bills, collecting money owed to you, maintaining or selling your house and managing your investments.
Your power of attorney for property could be a family member, spouse or long-time friend. Depending on your financial complexities, you might want to ensure there is the necessary expertise to make correct decisions.
This could be done by including someone you trust and augment your power of attorney team by adding someone with the necessary financial ability.
It would be beneficial to communicate your wishes to the people chosen. Managing your finances if you are no longer able to can be challenging. You want to maintain a certain lifestyle without spending all your money which could suddenly and drastically change how you are able to live.
There is a restriction: your POA must be at least 18 years old. Also, it is a practical manner to have someone younger than you because if your mental incapacity is caused by the normal aging process, that also might become an issue with someone your own age.
During your lifetime you can change who you appoint as your power of attorney. Understand your ability to appoint a POA requires mental capacity. Therefore, if mental capacity becomes an issue no new POA’s can be selected.
Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through www.watsoninvestments.com