Setting up a durable financial power of attorney is a good way to eliminate concerns about how your assets will be managed if your health takes a turn for the worse and you are unable to manage them yourself. A durable financial power of attorney is a document in which you appoint someone, called an agent, to manage your finances on your behalf.
This can be an important document even if you have a living trust because your successor trustee will only be able to manage the assets in the trust. Your agent designated by a financial power of attorney will be able to manage whatever assets are not in your trust.
Who should be my agent?
When considering who to select as your agent, it is important to consider who you trust. Many people choose a spouse, adult child, sibling or close friend for this reason. However, you should also consider who in your life is good at managing money and can handle the responsibility of managing your money as well as his or her own.
There are many tasks your agent may be responsible for, including:
- Paying your bills and taxes
- Managing your real estate
- Buying insurance for you
- Collecting retirement benefits on your behalf
If your agent is already very busy with his or her own life, it might be difficult for that person to handle the numerous responsibilities that can come with being your agent. This may also be the case if your agent lives far away from you.
You do have the ability to name a substitute agent, who can act on your behalf in the event that your first choice is unable to for any reason. It is often a wise decision to take advantage of this option.
Selecting the right person to be your agent can put your mind at ease. It can be a relief to know that even if something happens to you, your financial affairs will be taken care of. However, there are many considerations when selecting someone to be your agent, and ultimately your selection is a personal choice.
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