What is a Financial Power of Attorney and why might you need one?

Life is full of the unexpected — an illness, an accident, or even just the realities of aging can leave you temporarily or permanently unable to manage your finances. If that happens, having a trusted person who is legally empowered to act on your behalf can make a big difference. That’s where a Financial Power of Attorney (POA) comes in.   But a POA is not just for the elderly or seriously ill—it’s a smart, proactive step for adults of any age.

A Financial Power of Attorney is a legal document that allows you (the “principal”) to authorize someone else (the “agent” or “attorney-in-fact”) to manage your financial affairs. This can include anything from paying bills and managing investments to filing taxes and handling real estate transactions.

A POA is a critical part of any estate planning strategy because it allows continuity of managing your finances in case of incapacity.  If you become ill, injured, or are otherwise unable to handle your own finances, a POA ensures that someone you trust can step in immediately to keep your affairs in order—without delays, court involvement, or confusion.

By formally appointing someone you trust, you reduce the risk of others stepping in without your consent or knowledge, especially during times when you’re vulnerable or unable to communicate clearly.  Without a POA in place, your family may have to go through a lengthy and often expensive court process to be appointed as your guardian. A POA helps bypass this and gives clear legal authority to your chosen agent.

Even if you are not incapacitated, a POA may be useful if you are traveling, deployed, or just want help managing your finances. Your agent can deposit checks, sign documents, or handle transactions on your behalf.

The person you choose as your agent should be someone responsible, trustworthy, and capable of handling financial matters. It could be a family member, close friend, or even a professional fiduciary. It’s also a good idea to name a backup agent, just in case your first choice is unavailable when needed.

Speak with a legal or estate planning professional to draft a POA tailored to your needs and to ensure it complies with your state’s laws. It’s an easy but important step that can prevent big problems down the road.