Selecting an agent for your financial power of attorney

A power of attorney is one of the most important estate planning tools.

When you sign a power of attorney, you give someone else the authority to act on your behalf as your agent. A power of attorney may become effective immediately or only upon incapacity. Either way, it is a very powerful document.

Agents usually have a broad scope of power, including withdrawing money from bank accounts, selling property, signing contracts, opening credit cards and dealing with government benefits. Powers of attorney carry with them the potential for abuse. Think carefully about the person you choose to act as your agent.

The most obvious consideration when choosing an agent is trust. An agent must always act with the highest degree of integrity on your behalf. Choose someone you would trust with your checkbook. If you have any uncertainty as to someone’s integrity, then that person is not the best choice.

An agent should be financially responsible and disciplined. Managing someone else’s money is a big responsibility. People who are poor money managers will not become successful managers simply because they are dealing with another person’s money. Avoid choosing people who have past or present financial issues. Try to find someone with a similar financial management style.

Proximity is also an important consideration. If you have two equally qualified children, it makes more sense to appoint the child who lives in the same town as you rather than the child who lives out of state. An agent does not have to live in the same city or state as you, but close proximity does make the job easier.

A power of attorney is a great tool when it is in the hands of the right person. Take your time when choosing the best person for this important job.