As part of long-term or estate planning, you may have decided to create a power of attorney (POA). This step is critical for ensuring your wishes are carried out even if you become incapacitated. With respect to both financial and medical decisions, a POA offers future protection. However, it is essential that you name the right person to be the agent for your POA.
A power of attorney is a legal document between you, the principal, and your agent. Your agent is legally known as the attorney in fact, who is granted the power to make important choices on your behalf.
No matter what type of POA you envision, selecting a trustworthy and reasonable agent is paramount. The following will highlight your agent’s powers and contain suggestions for what to consider when naming an attorney in fact for your POA.
What Is an Agent?
Your agent is legally authorized to act on your behalf. Despite being formally known as an attorney in fact, it is not required that your agent have legal training or be a lawyer.
An agent has a fiduciary duty towards you as the principal. This means that person must act towards your benefit, especially in financial matters. However, depending on state law, your agent can enter into deals that they benefit from themselves. So long as they act to your benefit as well, there is no breach of their fiduciary duty.
What Can an Agent Do?
An agent’s role, including their rights, responsibilities, and duties, will be defined in your power of attorney agreement. Depending on what type of POA you seek to create, the agent’s powers can be limited or broad.
For example, a medical power of attorney is an agreement limited to your care and treatment. It will allow your agent to make possible life-and-death medical decisions when you are unable to consent. But it does not generally grant your agent any role in handling your business or finances beyond what is necessary to provide your medical care. However, a medical power of attorney's duties can include deciding whether you are resuscitated or receive life-support.
Historically, a POA would create a principal-agent relationship immediately upon signing. If you, as the principal, were to become incapacitated, the POA would cease to be effective. However, most people creating an estate plan want the exact opposite. Therefore, springing and durable power of attorney agreements have become more popular.
A durable power of attorney means that it remains effective even after the principal’s incapacitation. Meanwhile, a springing POA only becomes effective upon your incapacitation. If your POA is not springing, your agent can begin making financial decisions for you immediately. You may prefer this outcome or want to avoid it altogether.
Some typical duties of the attorney in fact as your agent include:
- Control of your bank accounts.
- Power to make investment decisions.
- The ability to buy, sell, or transfer your property.
- Day-to-day operations of your business or companies.
You can limit or extend powers to your agent so long as your state allows these designations under its POA laws. Typically, whether an agent has a particular ability is interpreted broadly in favor of the agent. So, be careful when outlining what actions you do or do not want your agent to take.
Read more: How to choose the right POA
5 Rules When Choosing an Agent
Because of the significant powers a POA grant an agent, choosing your agent wisely is vital. The following are five considerations to keep top of mind when picking an attorney in fact for your POA.
Someone You Trust
Your agent will have control over at least some of the most important, delicate decisions affecting your health and wealth. You need to trust your agent implicitly without reservation.
Someone Located Near You
It can be essential to name an agent located within reasonable proximity to you. Though not necessarily a deal-breaker in today’s electronic world, someone who can quickly insert themselves in your place will make a smoother transition. This is especially critical if you anticipate your agent handling day-to-day business operations.
Someone Who Is an Organized, Level-Headed Person
Your agent will likely be adding their duties as attorney-in-fact to established career and family responsibilities. They will need to be organized so as to not be overwhelmed. Especially because of emotions regarding your incapacitation, they need to be level-headed. Many of your agent’s decisions will be hard and have consequences for people you - and possibly they - love. They need to be someone who can think clearly in stressful situations.
Someone Who Shares Your Wishes and Values
Though you will explain your general desires in your POA, your agent should be someone who knows the details of your wishes and values. If you have a policy to avoid risky investments, you should avoid naming an attorney in fact who would gamble away your life savings. Consider having long discussions with your potential agents where you lay out your exact plans.
Someone Willing To Be Your Agent
Do not name someone to become your agent against their wishes. The responsibilities can be daunting, and some people may not be equipped or have the time to carry out your wishes.
How To Create a Power of Attorney
Selecting your agent can be a stress-filled endeavor. If you have adult children you trust, it may be beneficial to consider naming co-agents to share the responsibilities. But it is typically advisable to not name more than two co-agents because it would paralyze decision-making. Other people to consider are long-time personal lawyers, accountants, or advisors.
No matter who you choose as the agent, creating an enforceable power of attorney can be easy with LawDistrict.com’s simple contract maker tool. After just a few clicks, you can have a POA agreement suited to your individual needs in minutes.
As part of long-term or estate planning, you may have decided to create a power of attorney (POA). This step is critical for ensuring your wishes are carried out even if you become incapacitated. With respect to both financial and medical decisions, a POA offers future protection. However, it is essential that you name the right person to be the agent for your POA.
A power of attorney is a legal document between you, the principal, and your agent. Your agent is legally known as the attorney in fact, who is granted the power to make important choices on your behalf.
No matter what type of POA you envision, selecting a trustworthy and reasonable agent is paramount. The following will highlight your agent’s powers and contain suggestions for what to consider when naming an attorney in fact for your POA.
What Is an Agent?
Your agent is legally authorized to act on your behalf. Despite being formally known as an attorney in fact, it is not required that your agent have legal training or be a lawyer.
An agent has a fiduciary duty towards you as the principal. This means that person must act towards your benefit, especially in financial matters. However, depending on state law, your agent can enter into deals that they benefit from themselves. So long as they act to your benefit as well, there is no breach of their fiduciary duty.
What Can an Agent Do?
An agent’s role, including their rights, responsibilities, and duties, will be defined in your power of attorney agreement. Depending on what type of POA you seek to create, the agent’s powers can be limited or broad.
For example, a medical power of attorney is an agreement limited to your care and treatment. It will allow your agent to make possible life-and-death medical decisions when you are unable to consent. But it does not generally grant your agent any role in handling your business or finances beyond what is necessary to provide your medical care. However, a medical power of attorney's duties can include deciding whether you are resuscitated or receive life-support.
Historically, a POA would create a principal-agent relationship immediately upon signing. If you, as the principal, were to become incapacitated, the POA would cease to be effective. However, most people creating an estate plan want the exact opposite. Therefore, springing and durable power of attorney agreements have become more popular.
A durable power of attorney means that it remains effective even after the principal’s incapacitation. Meanwhile, a springing POA only becomes effective upon your incapacitation. If your POA is not springing, your agent can begin making financial decisions for you immediately. You may prefer this outcome or want to avoid it altogether.
Some typical duties of the attorney in fact as your agent include:
- Control of your bank accounts.
- Power to make investment decisions.
- The ability to buy, sell, or transfer your property.
- Day-to-day operations of your business or companies.
You can limit or extend powers to your agent so long as your state allows these designations under its POA laws. Typically, whether an agent has a particular ability is interpreted broadly in favor of the agent. So, be careful when outlining what actions you do or do not want your agent to take.
Read more: How to choose the right POA
5 Rules When Choosing an Agent
Because of the significant powers a POA grant an agent, choosing your agent wisely is vital. The following are five considerations to keep top of mind when picking an attorney in fact for your POA.
Someone You Trust
Your agent will have control over at least some of the most important, delicate decisions affecting your health and wealth. You need to trust your agent implicitly without reservation.
Someone Located Near You
It can be essential to name an agent located within reasonable proximity to you. Though not necessarily a deal-breaker in today’s electronic world, someone who can quickly insert themselves in your place will make a smoother transition. This is especially critical if you anticipate your agent handling day-to-day business operations.
Someone Who Is an Organized, Level-Headed Person
Your agent will likely be adding their duties as attorney-in-fact to established career and family responsibilities. They will need to be organized so as to not be overwhelmed. Especially because of emotions regarding your incapacitation, they need to be level-headed. Many of your agent’s decisions will be hard and have consequences for people you - and possibly they - love. They need to be someone who can think clearly in stressful situations.
Someone Who Shares Your Wishes and Values
Though you will explain your general desires in your POA, your agent should be someone who knows the details of your wishes and values. If you have a policy to avoid risky investments, you should avoid naming an attorney in fact who would gamble away your life savings. Consider having long discussions with your potential agents where you lay out your exact plans.
Someone Willing To Be Your Agent
Do not name someone to become your agent against their wishes. The responsibilities can be daunting, and some people may not be equipped or have the time to carry out your wishes.
How To Create a Power of Attorney
Selecting your agent can be a stress-filled endeavor. If you have adult children you trust, it may be beneficial to consider naming co-agents to share the responsibilities. But it is typically advisable to not name more than two co-agents because it would paralyze decision-making. Other people to consider are long-time personal lawyers, accountants, or advisors.
No matter who you choose as the agent, creating an enforceable power of attorney can be easy with LawDistrict.com’s simple contract maker tool. After just a few clicks, you can have a POA agreement suited to your individual needs in minutes.
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