Estate Planning and Financial Decision Making

Everybody should plan for the possibility that they might become unable to make financial decisions for themselves due to illness, injury or mental incompetence. For example, if you were to be in an accident that affects your decision making ability, certain documents would provide instructions for handling your financial affairs.  There are three primary ways to handle alternate financial decision making:

• Power of Attorney: A document under which you (the principal) authorize another person or entity (an attorney-in-fact or an agent) to act on your behalf in a variety of financial situations.  It is made “durable” by adding a clause stating that the document will remain in effect if you become mentally incompetent.
• Asset Management Trust or Living Trust: A trust that you create to allow someone else (a trustee) to manage all or some of your assets.  
• Guardianships or Conservatorships: A court proceeding that appoints someone to manage your assets for you.

You can create your Power of Attorney and/or Living Trust with Rocket Lawyer.  A guardian or conservator is generally appointed by the courts when someone becomes incompetent and a Power of Attorney has not been created in advance.

Laws on this topic may vary from state to state. This content is not meant to provide you with complete information and it is not intended to be legal or tax advice. It is recommended that you consult with your own attorney, accountant or other advisor regarding your specific situation.