There’s a fun new game on the market that involves teams of players pretending to be spies, trying to guess the code names of “secret agents” via clues given by a teammate. The players need to pay close attention; choosing the wrong agent could mean losing the game. Naming the wrong agent can have dire consequences in real life, too. We have talked a lot in this space about the importance of having a power of attorney for both financial and medical decisions. Let’s talk about what you need to consider when choosing an agent for a power of attorney.
If, for some reason, you need someone else to transact business or make treatment choices for you, a power of attorney is the legal mechanism that allows that to happen. Your power of attorney grants authority to act on your behalf to a person of your choosing: your agent. Like choosing a guardian for your children, you shouldn’t select your agent impulsively or based on emotion. Let’s take a look at some considerations in choosing an agent.
What Do You Need Your Agent to Do?
You may want your agent to be on standby in case you are suddenly incapacitated, such as by an accident or stroke, but not to have authority to make decisions for you unless a situation like that arises. Such a power is called a “springing” power, because it springs into existence only when needed.
Or, you may want to entrust your agent with the power to help you currently. An example is if you are taking a temporary work assignment overseas, but want someone to pay your bills and manage rental property you own stateside. You could grant an immediate power of attorney.
A power of attorney can also be as limited or as broad as you choose to make it. You could empower your agent to manage your rental property, for example, but not to touch your other investments. Or you could allow them the power to make any financial decision that you could make for yourself. You can put a limitation on the length of the power (say, the date you return from overseas) or leave it open-ended.
What you need your agent to do will have an impact on your choice. If you simply need someone to pay your bills in the event you become legally incapacitated, you may not need someone with a background in finance. If you are looking for someone to manage significant or complex assets, on the other hand, you want someone with the time and skills to do so effectively.
What Should You Look For When Choosing an Agent For a Power of Attorney?
An agent is a fiduciary—a legal term for someone who is obligated to put the interests of the person they represent above their own. The ability to put your interests first is one of the most important traits in an agent. If you suspect your prospective agent would handle your business dealings in a way that profits him or her, but is not in your best interests, keep looking. The same goes for an agent under a medical power of attorney; this person will quite literally hold your life in their hands. (Note: if you have named your spouse as your agent, but are considering or in the midst of divorce, make sure you change your agent right away.)
The ability to put your interests first is one of the most important traits in an agent.
Your agent should also be someone level-headed and organized, not only for a financial power of attorney, but for a medical one (also known in Michigan as a designation of patient advocate). Especially if you become incapacitated by a medical emergency, your agent may need to make significant decisions on your behalf with relatively little time for reflection. You want someone who will be able to confidently manage the issues at hand.
Likewise, you want an agent who will not only be trustworthy and steady, but who will understand and honor your wishes, whether for your financial matters or your medical care. If you do not want to be kept alive by extraordinary measures, and your son insists he would keep you alive at all costs, he might not be the best agent for health care decisions.
Similarly, if you are a conservative investor, and your sister tends to take risks with the market, she may not be the ideal agent under a financial power of attorney. A different approach is not necessarily a deal-breaker if you are confident your agent will override his or her impulses in favor of your preferences. You will also need to make those preferences very clear, ideally in writing. Having a document to refer to will be helpful to your agent, especially in case of emergency.
Don’t forget one last detail: make sure your chosen agent feels up to the task. Acting as an agent under of a power of attorney is a big responsibility. Knowing that your agent is both well-equipped and willing to serve will give you both peace of mind.
Need to create a power of attorney or change your agent? Contact our office; we’re ready to help.
You may also be interested in: