When you create a durable financial power of attorney, you create a document that grants someone, called an agent or an attorney-in-fact, the power to manage your financial affairs. Unless you limit the legal power you grant this person, he or she will be able to access your bank accounts, pay your bills, manage your property, sell your property, invest your money, hire someone to care for you, as well as other actions.
Due to the nature of these tasks, choosing your agent is the most important step in creating a power of attorney. However, people often choose their agents for the wrong reasons.
Trust is a top priority
When choosing your agent, the most important consideration is trust. People often choose a spouse or adult child to serve as their agents. However, you should avoid choosing someone because of status, such as being your firstborn. Additionally, you should avoid choosing someone to spare hard feelings.
Your agent is a fiduciary, which means that he or she is legally responsible for acting in your best interests. However, some people act in their own best interests, even if it is a breach of fiduciary duty. To help prevent being taken advantage of, it is important to choose someone who you trust will act honestly and intelligently in your best interests.
When choosing an agent, you might also consider:
- How close that person lives to most of your assets
- How much time this person has to take on new duties
- If this person is willing to be your agent
Some people decide that they feel more comfortable naming co-agents. This involves two or more people being named agent and making decisions together. However, this can create delays in decision-making if the agents disagree or if they have conflicting schedules.
Sometimes, naming successor agents may make more sense than naming co-agents. Naming successor agents helps ensure there is someone available to manage your affairs, even if your first choice is unavailable when he or she is needed.
Having a durable financial power of attorney can help make sure your financial affairs are not neglected if something prevents you from managing them yourself. However, it is important to choose your agent carefully to help prevent potential problems when he or she steps into this new role.