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VOL. 129 | NO. 163 | Thursday, August 21, 2014

Dana and Ray Brandon

In Case of Incapacitation

By Ray and Dana Brandon

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Ray’s take: A financial power of attorney is a powerful tool in your financial planning arsenal in the event your investments or other financial matters need action and you can’t do it.

The reason could be an accident or other health-related issue, or even just being out of the country. With this document, you, as the principal, give power to act on your behalf to an “attorney-in-fact.” This person does not need to be a lawyer to take responsibility.

There are several levels of authority you can grant to the attorney-in-fact, and the choice should be thought through very carefully. A durable power of attorney grants the chosen person the authority to conduct all of your financial affairs with or without consulting you.

A limited power of attorney is just that. It limits the specific occasions in which the attorney-in-fact is authorized to act on your behalf to specifically stated situations. A springing, or conditional, power of attorney comes into play only once you are totally disabled. While it is tempting to go with a limited or conditional choice, it is impossible to predict exactly which “conditions” will come up. If you choose the more comprehensive approach, the trust level should be very high.

The primary goal for a power of attorney is to make sure your financial obligations are met if you are unable to handle them – bills paid, deposits made, administrative details continued. This can also include handling tax matters, dealing with the IRS and making decisions regarding retirement assets. These would all be clarified in the particular power of attorney you choose to implement. You should always seek professional legal counsel on how and when to use these tools.

Dana’s take: Even though it’s difficult to imagine a medical event or accident that could leave you unable to pay your mortgage or bills, it’s important to plan for that possibility.

Choosing someone to handle your affairs can be a daunting decision. Your spouse would make sense as your first choice, but what happens if you are widowed? Who do you trust to make the right decisions for you and any children you have who are currently underage?

If you have adult children, do you want to give them the authority to make your decisions? Are they mature enough? What about your own parents? Are they able to make these type of decisions for you? Are your children or parents knowledgeable enough about the assets you have to make sound business decisions you your behalf?

Make sure you choose wisely when you are thinking about creating this document. Power of attorney puts your financial affairs in the hands of someone else. If you don’t choose wisely, it could boomerang on you with negative results.

Ray Brandon is a certified financial planner and CEO of Brandon Financial Planning (brandonplanning.com). His wife, Dana, has a bachelor’s degree in finance and is a licensed clinical social worker. Contact Ray Brandon at raybrandon@brandonplanning.com.

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