What Is a Power of Attorney for an Agent (and How to Choose One)?
You will never regret your plans for the future. If you become incapacitated for any reason, it is important to make sure there is someone available to help you manage your affairs. One of the most popular ways to do this is to appoint someone to give you financial power of attorney. But not everyone has the obvious choice – you can age on your own or not have family members you trust with that power. What do you need to do to keep your finances in safe hands?
Here’s what you need to know about who you can and should name as an agent in a power of attorney to keep your assets safe even if you can’t manage them.
What is a financial power of attorney?
There are several different types of power of attorney. A financial power of attorney allows someone else to manage your finances while you are still alive, but you cannot manage them yourself. Specifically, according to Market Watch , experts generally recommend a durable power of attorney that takes effect immediately after you sign the paperwork and remains in effect until you die.
A power of attorney does not mean that you have relinquished control of your assets; having an agent simply means that your agent can also act on your behalf if needed. The power of attorney expires when you die, and control of your finances usually passes to the executor you named in your will (which may or may not be the same person).
How to choose a power of attorney?
Given this person’s power and responsibility over your finances, you should appoint someone you trust to look after your best interests. In addition to trust, it doesn’t hurt to choose someone who is well versed in your finances and the responsibilities that come with it. However, the American Bar Association argues that the most important quality of a potential agent is not business acumen, but honesty.
But what if there is no one in your life who fits the bill? While it is common for people to nominate family members, you can choose anyone over the age of 18 to receive a power of attorney.
Look around for other people in your community who are ready and qualified to take on this role. It could be a friend, an accountant, or perhaps a clergyman. You can even select multiple people for this role so they can share the responsibilities (just make sure the power of attorney allows each agent to act independently).
Finally, if there is no one in your life to whom you would like to grant power of attorney, one option is to contact a court-appointed guardian in case you become incapacitated.
How much does a power of attorney cost?
One of the main advantages of having family members take on this role is that they will likely not need financial compensation. If you ask a professional lawyer to issue a power of attorney for a long time, their legal fees can quickly increase, and you do not know how long you may be incapacitated.
Before you settle for any fixed or hourly rate, do a little research. The hourly rate for a family or probate attorney averages around $300 an hour (according to Market ContractsCounsel ). Depending on how many hours they charge for acting as a power of attorney, that cost can dangerously drain your resources. Get third-party legal advice and perhaps ask for an hourly breakdown of how much time your potential attorney spends managing their incapacitated clients.
As Policy Genius points out, if you choose to create a power of attorney yourself, you typically only pay the cost of notarization. However, AgingCare recommends investing in a lawyer to be present when the power of attorney document is created, as the online versions come without a professional attorney, no legal witnesses, no customization, and no quality assurance.
Takeaway
Appointing someone in your life as a confidante is an important step in any life preparation plan. You may not have an obvious choice of who should take on this role, but you can consider options beyond immediate family. Make a list of all viable options in your community, and don’t discount friends just because they’re the same age or in the same boat as you.
Editor’s note: This is not professional legal advice. Consult with a lawyer before making any decisions about your will, assets, and general estate planning.