One of the most important decisions when preparing your will and powers of attorney is not about what happens after you pass away; it involves deciding who will manage your finances if you become unable to do so yourself. Consulting with an experienced estate planning and elder law lawyer can help you understand this crucial decision that protects both you and your family.
Whether due to illness, injury, or cognitive decline, there may come a time when you can’t manage your own financial affairs. Your financial power of attorney will have legal authority to pay your bills, manage your investments, handle your banking, and make financial decisions on your behalf.
Given the significance of these responsibilities, the key question becomes: who should you entrust with this vital role?
What Makes a Good Financial Power of Attorney?
Financial Responsibility and Common Sense: Look for someone who manages their own money well. They do not need to be wealthy, but they should demonstrate good judgment with financial decisions. Ask yourself, do they pay their bills on time, do they live within their means? If they struggle with their own finances, they are probably not the right choice for you.
Trustworthiness and Integrity: This person will have access to your bank accounts, investments, and financial information – trust is imperative. Choose someone with unquestionable honesty who will always act in your best interests, not their own. Trust your instincts; if you have any doubts, keep looking.
Availability and Proximity: When selecting your financial power of attorney, consider how accessible your candidate is both in terms of location and time. Financial matters frequently demand prompt action, so it is important to choose someone who can be easily reached and is able to respond quickly to urgent issues. If your chosen individual is often away for business or lives far from you, their ability to manage your affairs effectively could be limited. Even with a high level of trust, it is wise to evaluate whether their schedule and physical proximity allow them to fulfill these responsibilities. If not, it may be necessary to reconsider your choice to ensure your financial matters are managed without unnecessary delays.
Organizational Skills: Managing someone else’s finances requires a strong attention to detail. They should have no issue keeping detailed records, tracking expenses, and staying organized. Look for someone who naturally keeps good records and pays attention to details. This is not the job for someone who is prone to mistakes or missing deadlines.
Comfort with Financial Tasks: Some people are simply uncomfortable handling money matters or dealing with banks and investment firms. Your financial power of attorney should not be intimidated by financial institutions and have confidence when advocating for your interests.
Consider Age and Family Dynamics
Many people automatically consider appointing a family member when establishing a power of attorney. While it may feel natural to choose your spouse or eldest child, it is important to think carefully about their age and health. If your spouse is close in age to you, they could be facing their own health challenges at the very time you need support the most. Sometimes, selecting a slightly younger family member or trusted friend may be a more practical solution, especially for long-term planning.
It is important to also consider how your choice of financial power of attorney might affect family relationships. In some situations, even if one family member is the most financially capable, appointing them could lead to conflict or resentment among other relatives. The potential for family discord should be considered to ensure that your decision supports both your best interests and family harmony.
Don’t Put All Your Eggs in One Basket
It is always wise to name one or more backup agents when setting up your financial power of attorney. Circumstances can change over time, and your first choice may become unavailable due to health problems, family obligations, or other life events. Identifying trusted alternatives in your legal documents ensures that someone you can rely on can step in if your initial agent is unable to serve.
The Conversation You Need to Have
Once you have carefully selected the person you wish to appoint as your financial power of attorney, it is essential to sit down and have an open, honest conversation with them. Begin by explaining what this role entails, including the responsibilities and expectations involved. Make sure they understand where your important documents are located and clearly communicate your wishes regarding future financial decisions. Never surprise someone with this appointment. Instead, confirm that they are both willing and able to accept this responsibility. This conversation helps ensure that your chosen agent is prepared and comfortable with the commitment.
Why Timing Matters
The timing of when you establish your financial power of attorney is very important. Addressing this matter while you are healthy and capable allows you to make informed choices to ensure your wishes are honored. If you wait until you are no longer able to make these decisions yourself, it will be too late to create these documents, and your family may have to go through the courts to get authority to handle your affairs. Acting early avoids a costly, time-consuming process that could have been easily avoided.
Get Professional Guidance
Choosing the right financial power of attorney requires careful consideration and an understanding of the legal requirements, the unique circumstances, and practical considerations of your specific situation. Location can impact your decision as laws governing powers of attorney differ from state to state. It is important to be aware that your location may influence your options and obligations. Consulting with an experienced attorney can help you navigate these complexities. Our Florida-based estate planning lawyers can help you evaluate your options and create documents that protect your interests.
Contact us today to discuss your power of attorney needs and put these essential protections in place with confidence.
