Planning for the future involves more than just arranging for who will take care of your estate after your pass. A critical part of estate planning is guaranteeing there is someone you trust who can make sound medical or financial decisions on your behalf.
A power of attorney (POA) is a legal document that allows you to name an agent who will make financial decisions in your name if you become incapacitated. This person will have the authority to speak on your behalf regarding financial matters such as paying medical costs or transferring monetary assets.
Picking a power of attorney can be a challenge. Your first instinct might be to name your spouse, a sibling, or your adult child as your agent. However, the key to appointing the right power of attorney is to choose the person who will most closely respect your values and wishes.
Here are a few essential factors to consider when choosing a power of attorney:
- Location – It’s essential to have a POA who lives nearby and will likely remain nearby for the foreseeable future. Making financial decisions and collaborating with lawyers or other professionals can be challenging if your POA lives out of state. The closer they are, the easier it will be for them to follow through with necessary duties.
- Trustworthy – There are many responsibilities for a POA, and you should choose someone you believe is reliable and can get the job done. After all, you will be entrusting them with your finances, and it’s crucial that your POA will make sound decisions that won’t come back to hurt you or your family.
- Understands finances – A financial POA should have some knowledge of finances as it can help them make the right decisions. Someone who isn’t as comfortable with making certain financial choices may have trouble understanding the duties required of them to be a POA.
- Availability – Your power of attorney should be someone who has the flexibility in their schedule to perform the necessary tasks. Someone who frequently travels for work or has a demanding job may not be the best choice as they might not have as much time to dedicate to being a POA.
- Assertive – Someone who might cave to the pressure of being a POA may not be the best choice. Instead, pick someone you know who isn’t afraid to stand up against injustices and excels in communication. This kind of person will make their voice heard on your behalf.
Your POA should be someone you feel completely comfortable with handling your finances and making decisions in your name. You should also remember to pick someone willing to perform these duties instead of forcing someone who is not. Whether you decide on a relative or a close friend, finalizing your power of attorney is a necessary step in preparing for the future.