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A financial power of attorney is a legal document that grants authority to another person, known as an agent or attorney-in-fact, to make financial decisions and manage financial affairs on behalf of the principal, typically in the event of incapacity or inability to handle matters independently. It allows the appointed agent to handle tasks such as paying bills, managing investments, and making financial transactions on behalf of the principal.
By considering the following questions, you can select a financial power of attorney who is capable, trustworthy, and aligned with your financial goals and values.
1. Trustworthiness and Reliability
- Can I trust this person to act in my best financial interests?
- Are they responsible and reliable when it comes to managing finances?
2. Understanding of Financial Matters
- Does this person have a good understanding of financial matters, including managing investments, paying bills, and filing taxes?
- Are they comfortable making financial decisions on my behalf?
3. Availability and Accessibility
- Will this person be readily available to handle financial matters when needed?
- Are they geographically close enough to access necessary documents and assets?
4. Communication Skills
- Is this person a good communicator who can effectively convey my wishes and financial preferences?
- Will they keep me informed and involve me in major financial decisions?
5. Organization and Record-Keeping
- Is this person organized and capable of keeping accurate records of financial transactions and documentation?
- Can they maintain confidentiality and secure sensitive financial information?
6. Conflict Management
- How does this person handle conflicts or disagreements when managing finances?
- Will they prioritize my wishes and best interests in any financial decisions?
7. Familiarity with Assets and Obligations
- Does this person have knowledge of my assets, liabilities, and financial obligations?
- Are they aware of any specific financial accounts, investments, or debts that need attention?
8. Legal and Financial Expertise
- Does this person have any legal or financial expertise that could be beneficial in managing my affairs?
- Are they familiar with relevant laws and regulations related to financial power of attorney?
9. Fiduciary Duty
- Does this person understand their fiduciary duty to act solely in my best interests?
- Are they willing to provide an accounting of their actions as my financial power of attorney?
10. Backup Plan
- Have I designated an alternate or backup financial power of attorney in case the primary person is unable to serve?
- Is the backup person equally trustworthy and capable of managing finances?
11. Consent and Understanding
- Have I discussed my decision to appoint this person as my financial power of attorney with them?
- Do they fully understand the responsibilities and duties involved?
12. Legal Formalities
- Have I completed the necessary legal documentation to appoint this person as my financial power of attorney?
- Have I consulted with an attorney to ensure the document is legally valid and enforceable?
13. Continuing Relationship
- Is this person someone I expect to maintain a long-term relationship with, given the ongoing nature of the role?
- Are they willing and able to continue serving as my financial power of attorney as needed?
14. Review and Update
- Am I willing to periodically review and update my choice of financial power of attorney based on changing circumstances or relationships?
- Have I communicated any changes or updates to my appointed financial power of attorney?
15. Legal and Financial Protections
- Am I aware of any legal safeguards or protections I can put in place to prevent misuse or abuse of financial power of attorney?
- Have I discussed these protections with my attorney and financial advisor?
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