Consider Who Can & Will Act As Your Power of Attorney
As we age, it becomes increasingly important to have financial powers of attorney in place to ensure someone can manage our finances once we’re unable to do so. Who you select in that role is a critical decision, as he or she will have a variety of duties and responsibilities when acting on your behalf.
This week’s MoneyDo: consider who can and will act as your power of attorney.
Your selection process will require some in-depth thought. Your choice must be someone you trust with your finances – and someone you can rely on to act in your best interest.
It’s Not Always Family
It may seem easy to default to a family member as your choice for power of attorney. Remember – that family member will be involved in your finances. Make sure it’s someone you trust.
A Servant’s Heart
It’s important to talk through your decision with your potential Power of Attorney. He or she should acknowledge their personal willingness to serve your wishes amidst stress. Let them be honest with you about their commitment, and their ability to navigate what could be overwhelming circumstances.
Close To Home Isn’t As Critical As It Used To Be
While proximity to you may be important, it’s not as critical as it used to be due to online banking and being able to have virtual meetings with advisors. What is important is that the person has the time necessary to undertake POA responsibilities. The more you can do to consolidate and simplify your financial situation, the easier it will be when they need to step in and take over.
Power of Attorneys tend to be needed at emotionally-charged times, when many conflicting voices may add stress to the moment. Consider who you’re selecting: can they handle the pressure and avoid undue influence from external sources?
Your choice should be able to resist family and friends’ insistence and hold to your wishes.
Time For A Communicator
Consider how your candidate communicates. Could he or she plainly and calmly speak both to your family and other interested parties?
An effective communicator in a time of trial will help you and your family navigate an emotional time.
What To Do If You’re Asked
If you are asked to serve as a power of attorney, or now find yourself acting in that role, the power of attorney has responsibilities to:
- Act in accordance with principal’s reasonable expectations
- Act in good faith
- Act within the scope of authority granted
- Act with loyalty for principal’s benefit
- Act impartially in the principal’s best interest and avoid conflicts of interest
- Act with care, competence and diligence
- Keep records of all receipts, disbursements and transactions
- Attempt to preserve the estate plan of the principal
- Cooperate and coordinate with the named health care power of attorney, if activated.
To be able to do all these things not only takes time, but it requires you to have a full understanding of an individual’s financial life.
A few critical steps to help you succeed in the role:
- Read the Durable or Financial Power of Attorney that named you, so you understand the powers granted to you under the document.
- Gather information about financial assets, sources of income, expenses, monthly obligations and liabilities, along with tax returns, and contact information for various advisors.
- Begin to work with various financial institutions as the power of attorney. You’ll likely need to provide them with a copy of the document that names you in the role.
Finally, perform any and all actions necessary to act on the individual’s behalf while following all the responsibilities.
If you ever have questions about whether or not an action is appropriate, you should consult legal counsel to avoid problems in the future.