There are several decisions to make when creating a power of attorney as part of an estate plan. Beyond selecting who to name as primary agent, you must also consider alternates and the specific powers to grant. There is no single or standard power of attorney document that works for everyone. This is why it’s critical to work with an attorney to make these decisions. Here’s a closer look at 3 important decisions for a power of attorney.
1 – Name an Attorney-in-Fact
Deciding who should have the power to manage your finances can be tough. An attorney-in-fact has a legal obligation to act in your best interest, but you are obviously not able to monitor their activities if you are disabled or incapacitated. Thus, you should select someone that you thoroughly trust. It can be a spouse, family member, friend or even a professional that you hire (such as an attorney or CPA). When selecting an individual, he or she must be of legal age (18+). Married couples commonly assign this responsibility to their spouse.
2 – Name Alternates
In addition to the primary attorney-n-fact, you should also name an alternate. This is an equally important decision, especially in cases where your primary is a spouse. For instance, if you and your spouse are both injured in a serious accident, the alternate may need to step in. You can actually name multiple alternates, in order of preference. There’s also the ability to grant equal power to more than one attorney-in-fact at a time, but that can get complicated if disagreements occur among those individuals.
3 – Assign Special Powers
Another one of the important decisions when creating a power of attorney involves deciding what authority you want to grant to the attorney-in-fact. You can grant a broad, thorough general power of attorney, which includes comprehensive authority to manage all of your financial affairs, or limited power of attorney. For limited powers, you can list exactly what is covered such as paying bills, controlling particular bank accounts, making decisions for a sole proprietor business, transacting real estate deals, etc. A limited Power of Attorney is generally done to address a specific asset or transaction.
One part of a good estate plan
These are just three of the key decisions you will need to make in creating a power of attorney. There are many more. Keep in mind, you may change or revoke that document at any time, so long as you remain competently able to do so. Also, a power of attorney is just one piece of a comprehensive estate plan. We recommend a review of all estate planning documents once a year to ensure that your plan continues to meet your personal goals and is adapted to changes in your life. Contact our team for assistance with creating a new estate plan or updating an existing one.