One of the biggest questions we may ask ourselves is who should we trust to manage our financial and healthcare decisions when we no longer have capacity to do so ourselves. This is a tough question for some because designating a power of attorney (POA) is a decision of trust, something not to be taken lightly. Otherwise known as an agent to your principal, a POA has the legal authority to represent and make decisions on your behalf. What characteristics should you look for when designating a power of attorney? No matter what type of power of attorney you seek, your potential agent must be trustworthy, honorable, and dependable to conduct your affairs in your best interest.
Oftentimes, people may prefer to choose a family member such as a spouse or adult child as a designated POA. If a family member is unable or unwilling to act appropriately, you can name a trusted friend as POA or, alternatively, you can a retain professional representation to ensure your interests are well looked after. Some people choose to have co-agents or name a secondary agent in the event that the first POA is no longer able.
Power of Attorney: Things to Consider
Stipulations regarding the selection of a POA are minimal. Your chosen power of attorney must meet two legal thresholds; be an adult and not be incapacitated. There are no special qualifications regarding financial or legal knowledge. Integrity is actually considered the most important attribute when selecting your agent.
Questions to Consider Beyond the Trust Factor include:
- How does this person manage their own legal and financial responsibilities? Are they financially responsible? Are they good at making decisions under pressure?
- Will the person you select charge you a fee for their service? Family members will not generally charge money but, if you choose professional representation such as a financial planner or an attorney, there is usually a fee associated with their service.
- Is the person you want to represent you willing and able? Becoming an agent is a big responsibility, and for many reasons, the person you ask may not want that responsibility on their shoulders.
Your power of attorney agent can have broad or limited legal authority to make decisions on your behalf. This may include property, finances, and medical care. The agent’s power is determined by permission you grant. If you are unhappy with your agent, you can terminate the POA/agent relationship. Your POA must also comply with state law. When you work with Michaelson & Associates, we will make sure yours complies with all applicable laws.
Misconceptions About the POA
The first misconception is that you can create a POA on your behalf after you are incapacitated. You cannot perform this action because it is too late once you are incapacitated. For your power of attorney to be valid, your agent must be appointed before you become incapacitated by illness or disability. If you do not have your POA agent legally in place and are unable to manage your affairs due to incapacity, it may become necessary for a court to appoint someone to act on your behalf. This process is generally referred to a Guardianship, and the people appointed to represent your interests at this time are referred to as guardians, conservators, or committees (depending on state law). To avoid someone you don’t know or don’t like making decisions for you, it is imperative to have the proper power of attorney in place before you become incapacitated.
Another common misconception is that your POA agent can make any financial decisions they want in regards to your estate and that all POA documents are the same. In actuality, your selected agent has an overriding and legal obligation, known as a fiduciary obligation, to make decisions in your best interests. This responsibility is what makes choosing a trustworthy agent so important. You must have full confidence in the actions your agent will take on your behalf, or you should consider choosing another agent. Also, remember that you can appoint different agents for different POA document functions.
Michaelson & Associates can help you figure out which powers should be given to which agents in your life, and setup the documents to your exact wishes. For example, you may want a different agent to handle real estate transactions on your behalf, something we can help you achieve.
Selecting an agent and preparing a financial power of attorney is an important part of your overall estate plan. Call us today to setup a free first time consultation to learn more about your estate planning, asset protection, and senior law concerns.