Do I Need a Financial Power of Attorney if I Have a Will or Trust?

It is generally advisable to have a financial power of attorney in addition to a trust or will. A financial power of attorney is a legal document that designates a trusted individual to make financial decisions on your behalf if you are incapacitated or unable to manage them on your own while you are still alive. In contrast, a trust or will is a legal document that addresses the distribution of your assets after your death. These documents should be used together to ensure that your assets are protected in life and after you die.

Examples of situations where it would be beneficial to have a financial power of attorney in place can include severe illness, injury or changes in decision-making capacity due to aging. In these circumstances, having a financial power of attorney means that your designated agent will be able to pay bills, manage your finances and make other important financial decisions on your behalf in alignment with your preferences. If you do not have a financial power of attorney, your loved ones might have to take legal action to manage your assets. 

Since a financial power of attorney is only applicable while you are alive, your designated agent will not be able to make financial decisions or manage your finances after your death. This is another reason why a will or trust becomes necessary, since these legal documents ensure that your finances and assets can continue to be managed by someone you trust. By filing all three of these documents, you can form a comprehensive estate plan that will provide both you and your loved ones with peace of mind. 

Sources

“How Do a Last Will and Power of Attorney Work Together?” Legal Zoom. https://www.legalzoom.com/articles/how-do-a-last-will-and-power-of-attorney-work-together 

“Financial Power of Attorney: Definition, Required Forms, and Example”. Investopedia. https://www.investopedia.com/terms/f/financial-power-attorney.asp