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choosing an agentChoosing an agent for your Durable Power of Attorney for Finances deserves as much consideration as choosing the right executor. As described in the article A Coherent Estate Plan Consists of More Than Just a Will, estate planning involves taking care of yourself first. As such, the Durable Power of Attorney for Finances becomes an integral document for your estate plan.

The Durable Power of Attorney for Finances is a document that allows you to designate an agent to handle your finances in the event you become incapacitated. Additionally, the agent you choose has only the financial authority that you grant them in the document. Therefore, choosing an agent for your Durable Power of Attorney for Finances is vital to building a solid estate plan.

Considerations for Choosing an Agent

When choosing an agent for your Durable Power of Attorney for Finances, the person must possess certain attributes to handle your finances competently. The person you are considering should have some or all of the following attributes:

  • Must be trustworthy and possess good financial judgement
  • Must be able to organize and keep accurate records
  • Have the ability to act in your best interest
  • Ability to avoid conflicts of interest

Additionally, if your finances are complex, consider adding compensation for your agent in the document. Regardless of your relationship with your agent, it’s only fair to provide compensation to handle complex finances.

Granting Authority to Your Agent

In addition to choosing an agent with the right attributes, you must also grant authority to your agent. According to Plan Your Estate by Nolo, consider granting all or some of the following powers to your agent:

  • Pay everyday expenses
  • Pay the mortgage, upkeep, and taxes on real estate and other property
  • Collect benefits such as social security and medicare
  • Invest money in stocks, bonds, or mutual funds
  • Handle financial transactions with banks and other financial institutions
  • Buy and sell insurance policies and annuities
  • File and pay taxes
  • Operate your small business
  • Claim or disclaim property you inherited or otherwise entitled to
  • Represent you in court or hire someone to represent you
  • Manage retirement accounts

Although people in most common estates grant broad powers to their agents, apply common sense when granting authority. If you grant more authority than your agent can handle, problems could arise if you become incapacitated.

Additional Thoughts on the Durable Power of Attorney for Finances

The Durable Power of Attorney for Finances is not only an important document, it is also flexible. Every state recognizes the document and can be changed anytime. The only requirement for changing the document is that you are of sound mind.

Finally, choosing an agent could be as easy as designating your executor as agent. Since the document is only valid during life, using the same person for both roles provides continuity in the estate. The day you perish is the day the agent becomes the executor. Therefore, the transition into estate administration becomes easier, which is the essence of a solid estate plan.

Was this article helpful? Do you understand why choosing an agent is important to your entire estate plan? Share your comments of questions in the comment area below. 

Recommended Reading

Plan Your EstatePlan Your Estate will help you understand the Durable Power of Attorney for Finances in more detail.