One of the biggest questions we may ask ourselves is who we should 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 if the first POA is no longer able.
Power of Attorney: Things to Consider
Stipulations regarding the selection of a POA are minimal. They are required to be over the age of 18 and have full capacity. There are no special qualifications regarding financial or legal knowledge. Integrity is the most important attribute when selecting your agent.
Other Questions to Consider
- 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 Law, we will make sure yours complies with all applicable laws.
Misconceptions About the POA
Misconception 1
The first misconception is that you can create a POA on your behalf after you are incapacitated. You cannot perform this action 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.
Misconception 2
Another common misconception is that your POA can make any financial decisions they want in regard to your estate. Additionally, many people think that all POA documents are the same. Your selected agent has 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 your designated agent, or you should consider choosing another agent. Also, remember that you can appoint different agents for different POA document functions.
Michaelson Law can help you create a power of attorney that’s specific to your needs. For example, you may want one person to handle your financial decisions and another to handle real estate.
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 consultation to learn more about your estate planning, asset protection, and senior law concerns.
