A power of attorney is a legal document granting a trusted person the ability to make decisions and conduct business on your behalf. In the event that you become unable to manage your investments on your own, it can become necessary to have a power of attorney step in.
Legal Implications of Granting Someone Power of Attorney
Granting someone the power of attorney is not a decision you should take lightly. You should always be cautious when giving another person the ability to control your money. The most important qualification for a power of attorney over your investment accounts is that they should be someone you trust completely. They should understand your investment goals and objectives, including how you would like your assets to be managed in the future to provide for yourself and your family.
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Power of Attorney and Your Investments
Although you don’t have to choose a financial expert, it will be helpful if your agent has some knowledge about investments – enough to make decisions and communicate effectively with your financial adviser. A power of attorney should specify the type of authority you are granting, what you still want to control, and how long the power of attorney designation will last.
The authority granted in a power of attorney for your investment can include anything from limited trading authority in a brokerage account, to total control over the decisions related to your investment portfolio and finances. This makes power of attorney an important decision, especially for seniors who need to avoid elder fraud.
Oftentimes, a brokerage firm will have its own power of attorney form or its own specific requirements. Also, power of attorney arrangements often terminate upon your death, so make sure you also have considered what will happen to your investment assets and other finances should you pass away.
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