- You’re critically injured or seriously ill. Or for some other reason you can’t handle your financial matters.
- Do you have a plan in place?
- Who will take care of paying your bills?
- How will your paycheck or other checks get cashed?
In Illinois this document is known as a power of attorney for property. It’s also known as a power of attorney for finances or a durable power of attorney. You are the “principal” and the person you name is the “agent.” The document allows your agent to manage your finances if you can’t. You may cancel the power of attorney at any time and do not have to give a reason; if not, the appointment ends when you die. You decide how much control your agent has over your finances. You can limit the powers of your agent to a specific time frame, or to specific functions. Some of the powers may include:
- using your assets to pay your bills and everyday expenses;
- handling your checking account or other transactions with banks and financial institutions;
- buying or selling real estate or other property;
- operating your small business.
Executing a power of attorney for property can save you and your loved ones the expense and difficulty of a guardianship proceeding in court. It can also prevent your relatives from intervening in your financial affairs if you are incapacitated.
A power of attorney for property can be made effective immediately (a non-springing power of attorney), or you can specify that it go into effect only if you become incapacitated or on a certain date (a “springing” power of attorney.) This is a very personal decision. If you create a “springing” power of attorney, your agent can act only if something that you specify happens, like becoming incapacitated. The disadvantage of this springing power of attorney may be delays in determining whether you are, in fact, incapacitated. A disadvantage of a non-springing power of attorney is that your agent could misuse it while you are still able to make your own decisions. Consult an attorney about what is right for you.
Naming someone as your agent should not be taken lightly. You are giving that person very broad rights to handle your finances, including the ability to empty your checking or savings account with your knowledge. The person you name as your agent should not only be someone who knows how to handle money, but also someone you trust completely.