Being a Financial Power Of Attorney
The designation of Financial Power of Attorney places the responsibility of financial matters on another person when an individual is not able to make their own financial decisions. This individual is obligated to make decisions that agree with the wishes of the individual granting the power of attorney.
Often investors without extensive financial experience are appointed as a loved one’s financial power of attorney. In a 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 as well.
Spectrem Group also revealed that being a financial power of attorney has a significant influence on those individuals 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. This makes them more likely to properly prepare their own end of life decisions.
Individuals who have been a financial power of attorney are also more likely to utilize a financial advisor. Nearly a third (32 percent) 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. These individuals understand the complexities of financial situations and are more likely to value utilizing a financial professional to help them with those complexities.
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 many investors naturally have. When selecting a financial power of attorney, it is helpful to appoint someone who is financially knowledgeable and make certain that individual is aware of your wishes from a financial perspective. If you have been appointed as a financial power of attorney for someone 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. It is also important that you understand what the financial wishes are of the individual that would be appointing you as their power of attorney.