Being appointed as someone’s financial Power of Attorney (financial POA) is a significant responsibility. This designation provides for the responsibility of financial matters to be given to another person when an individual is not able to make their own financial decisions. This individual is obligated to make decisions that are ones that agree with the wishes of the individual granting the power of attorney, however they are able to make decisions independently until the power of attorney is revoked or challenged.
Often investors without extensive financial experience are appointed as a loved one’s financial power of attorney. In a recent study from Spectrem Group it was found that over a third of investors have been the financial power of attorney for a friend or family member. These individuals are also far more likely to have assisted with a friend or family member’s funeral arrangement, or been a medical power of attorney.
Being a financial power of attorney also has a significant impact on how much being responsible for executing the plans of someone who has passed away influenced their own end of life decisions. Eighty-two percent of individuals who have been a financial power of attorney felt that being responsible for executing the plans of someone who passed away had a significant impact on their own end of life decisions.
Individuals who have been a financial power of attorney are also more likely to utilize a financial professional for their own end of life decisions. Nearly a third (32%) of individuals who have been a power of attorney utilize a financial advisor, compared to only 17 percent of those individuals who have not been a financial power of attorney.
Individuals who have been a financial power of attorney are also more knowledgeable about a wide variety of end-of-life topics. When asked about familiarity with various terms such as; living will, trusts, do not resuscitate documents, and beneficiary designations, those individuals who have been a financial power of attorney indicate a much higher level of familiarity.
Being appointed as a financial power of attorney is a responsibility that should be taken very seriously and requires more knowledge and expertise than individuals may normally have. If you have been appointed as a financial power of attorney it is critical to become properly educated on critical components of end-of-life issues from a trusted source, such as an attorney or financial professional.