Of all property management instruments, the durable power of attorney is the most important and most powerful one. Every adult should have a durable power of attorney readily available for when circumstances make it necessary that someone else take care of their property and finances.
A durable power of attorney is a relatively complicated, yet very effective legal document. In this document you give a person you trust the authority to act on your behalf regarding all matters related to your assets and capital. This is especially helpful in case you become unable to communicate effectively due to an accident or medical condition. This is why it is called a durable power of attorney, because it is still valid even if you can’t speak. And that is precisely its purpose, to speak out for you about your finances when you can’t.
The person you designate in your durable power of attorney is known as your attorney-in-fact. This person will be responsible for paying your bills and your family expenses, pay your taxes, manage your trusts, retirement accou nts, insurance policies and investments, apply and collect government benefits such as Social Security, Medicare and Medicaid, and manage your properties and use your resources to do so. In other words, your attorney-in-fact must be able to keep all your business matters running smoothly in times when you can‘t take care of them.
But, who should you trust all your business and financial matters should you become incapacitated or too ill to manage them? It should be someone you trust, but also someone skilled enough to make sound decisions, someone capable of promoting your best financial interests.
When choosing who you are going to name as your attorney-in-fact, you might want to look at the people around you first. You might be able to find someone suitable for this critical task among your family relatives or friends. You might want to consider the following order of preference: your spouse first, then your parents, then your adult children, then your siblings and/or your best friend. You want to designate someone that is of legal age and knowledgeable in financial matters, someone you have known for a number of years. Your attorney-in-fact should be someone that knows how you think and feel about certain values. This should be the person that would most likely think like you when pondering a financial or business decision.
If after going down the previous list you haven’t been able to find someone with these requirements, you will have to hire a professional business manager or a financial planner. These professionals work under a service fee that is well worth paying, considering all the money they can save you from losing, should your businesses come into a halt because of your medical condition.
Should you have to hire a professional to act as your attorney-in-fact, you should first review that person’s professional qualifications, credentials and business references. Make sure you get a written contract highlighting his or her responsibilities in detail and their service fees.
In any case, you should hold a private meeting with the person you decide to appoint as your attorney-in-fact. In this meeting you should hand this person a copy of your durable power of attorney, of the document itself. You should make sure that this person is available and willing to take this appointment seriously. You may want to go over a list of your financial affairs with this person and provide the names and addresses of the institutions and the number of your accounts to facilitate their task. You will also want to give this person some guidelines into what your preferences are regarding certain aspects of your finances and the way you believe your most critical issues should be handled when necessary. Most importantly, review and update your durable power of attorney with regularity, you don’t want to lose track of your attorney-in-fact’s location or circumstances. If you lose track of this person, you must revoke this document and write a new durable power of attorney designating someone else.
Something else, you must tell your spouse or your closest relative where you keep your durable power of attorney so that they can locate it and make contact with your attorney-in-fact when the time comes for that person to take over your financial matters.
A durable power of attorney will secure yours and your family’s quality of life in difficult times. It is a little price to pay for a matter of such great importance.