power of attorney

What Are the Responsibilities of a Financial Power of Attorney?

Perhaps you’ve been appointed power of attorney for someone you love, or maybe you are considering appointing a financial power of attorney in your estate planning documents. Either way, it’s important to understand the full responsibilities of a financial power of attorney and all of the work that goes into it. If you’re taking on this role, you want to make sure you’re prepared—if you’re putting this into your estate planning documents, you want to choose someone who is up for the task.

Learn more about the responsibilities of a financial POA and what this job entails. To get started on your estate planning journey, call Haygood, Cleveland, Pierce, Thompson & Short at 334-560-1936.

Manage Assets and Liabilities

One of the main jobs that a financial POA often takes on is the management of all assets and liabilities. That means paying bills to avoid defaulting on debts, keeping assets well-maintained and safe, and ensuring that you know exactly which assets and liabilities your principal has. If they have done a lot of work on their estate plan, this information—plus login information for online accounts—will likely be easily accessible to you. If not, you may have to do some digging to get the information you need.

Keep Up with Payments and Contributions

As noted, debt payments and other bills will likely be the responsibility of the power of attorney. Falling behind on payments can negatively impact the principal’s credit or even lead to the seizure of their assets, which is a huge violation of the POA’s duty to the principal. Additionally, make sure you know what type of retirement contributions are being made on behalf of the principal. These contributions often must be continued even during periods of incapacitation.

Handle Benefits

If the principal receives any sort of government benefits, such as healthcare assistance, a pension, or Social Security benefits, stay on top of the requirements for these benefits. In some cases, the POA must provide accounting showing the recipient’s financial standing, income, and assets.

For other benefits, the recipient must simply renew on a periodic basis. Regardless, it’s important for the power of attorney to be fully informed of all of the requirements and meet them. Losing benefits could cause serious damage to the principal’s financial well-being.

Keep Up with Taxes and Other Major Expenses

Property taxes, income taxes, and other taxes are often a crucial part of a POA’s tasks. Falling behind on tax payments could lead to loss of assets and even lawsuits. Again, if the principal maintains online accounts, it’s easy for the POA to simply step in and take over payments.

Look out for any unexpected tax bills—for example, if the POA does not know that the principal’s home is paid off, they may be assuming that the taxes are coming out of the mortgage payments. This could lead to a massive tax bill at the end of the year.

Protect the Principal’s Best Interests

In general, the power of attorney’s job is to act in the best interests of the principal. They are not allowed to use this position to benefit themselves or anyone else. Their duty is strictly to the principal. That’s why the choice of financial power of attorney is so important. When you name a power of attorney, you are literally putting your financial well-being in their hands should you become incapacitated. The person you choose should be someone you can trust without question.

Power of Attorney Agreements Vary

While all of these duties can be included in the power of attorney agreements, they aren’t automatically the job of the POA. A lot depends on what the principal wants, what jobs they are willing to give to someone else, and if they want to split tasks up between loved ones. If you are named financial power of attorney, go over your paperwork in detail so you know exactly what you can and cannot do.

Discuss Your Estate Planning Needs with Haygood, Cleveland, Pierce, Thompson & Short

Estate planning can be overwhelming, but working with the right legal team can make you feel empowered and prepared. Let us help. Call Haygood, Cleveland, Pierce, Thompson & Short at 334-560-1936 or contact us online to set up a time to talk about your needs.

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