Wise incapacity planning usually includes the execution of a power of attorney. This is a document that appoints an agent, also known as attorney-in-fact, who can legally sign checks, pay bills and make other financial decisions on your behalf, as the principal, in the event you become incapacitated by illness or an accident.
A power of attorney is also used when the principal is unable to be present to sign necessary documents. The designated agent can be given broad legal authority or limited authority to make decisions about the principal's property, finances, or medical care. A Healthcare Power of Attorney is for medical matters. A Durable Power of Attorney can name a trusted friend, relative, or advisor to sign papers or pay bills on your behalf, if you are unable to make knowledgeable decisions and take care of those things for yourself. These documents remain in effect if you become incapacitated.
Some financial institutions also may be initially reluctant to accept your power of attorney because they require the use of their own forms. It is best practice to send a copy of your power of attorney to each of your banks, brokers and other financial accounts to see if there is an issue BEFORE any potential problems arise! Some companies will also not recognize old powers.
A power of attorney can also end for a number of reasons, such as when the principal revokes the agreement or dies, when a court invalidates it, or when the agent can no longer carry out the responsibilities outlined. In the case of a married couple, the authorization may be invalidated if the principal and the agent divorce.
Reference: FedWeek (Feb. 1, 2022) “Putting an Incapacity Plan in Place”