Creating a durable financial power of attorney can be a good way to ensure your finances will be managed the way you like, even when you are unable to do so yourself. A durable financial power of attorney is a legal document that gives someone else the authority to act on your behalf regarding financial matters. This person is called your agent or attorney-in-fact.
Choosing someone as an alternate decision-maker can benefit you in a number of ways. Having a power of attorney can be a convenience, so you can allow someone else to sell or buy property on your behalf. Having a power of attorney can provide protection, ensuring your bills will be paid even if you fall ill. A power of attorney can also help prevent more restrictive measures, like guardianship. However, it is important to choose your agent carefully.
Trust in your agent matters most
Many people choose a spouse or adult child to serve as an agent, although some people choose professionals instead. Whoever you choose, should be someone you trust.
It is often best to avoid choosing an agent because of status. For example, do not choose an oldest son because he is the oldest. Trust should be your most important consideration when choosing an agent for a financial power of attorney. According to the American Bar Association, trust in your agent can be even more important than financial ability.
Why is trust to important?
Trust is so important when choosing an agent because your agent will be able to:
- Complete banking transactions
- Use your money to pay your bills and taxes
- Sell your property
- Manage your business affairs
Agents are fiduciaries, which means that your agent will have a legal obligation to act on your behalf. However, there have been instances of agents acting in their own best interests. As much as you may not want to think about it, if your agent acted in his or her best interests with your money, those actions could cause you significant harm.
A financial power of attorney can be convenience and a protection. However, an untrustworthy agent could put you in a bad financial situation. To get the most out of your power of attorney, be sure to consider trust when deciding on an agent.