A durable (financial) power of attorney appoints a person (referred to as an “agent”) to make decisions when you are incapable of making them. The document specifically lists financial and personal matters for which the agent has power, such as:
- Real estate and personal property
- Trusts
- Finances and bank accounts
- Retirement plans
- Business operations
- Taxes
- Insurance and annuities
- Gifts
The existence of a durable power of attorney is proof to all other parties that the agent is authorized to act on your behalf. Once the durable power of attorney is effective, those other parties must rely on what the agent says and does on your behalf.
Tips to help you select a durable power of attorney agent:
- Choose someone you know well and trust; if helping your elderly parent with this decision, be careful to listen and understand who they trust – it may not be you.
- Think about the agent’s decision-making style: Does it match yours? In case of your elderly parent: Does it match it theirs?
- Consider the agent’s experience in financial and personal matters – sometimes those closest to you relationally may not be the best person to make financial decisions.
- Select someone who would most likely reach the same conclusions as you would in the same situation. Again, if helping your elderly parent with this decision, it is important to look at this decision from their point of view.
A health care power of attorney is similar to a durable (financial) power of attorney but is specific to medical decisions and gives and agent authority to make health care decisions on your behalf. Similar tips apply in selecting a health care power of attorney, however the focus is on the agent’s capabilities with regard to health care matters as opposed to financial matters.
Who cannot be an agent?
Check with your state for laws regarding qualifications of who can be an agent. Many states have laws that disqualify certain people from being your agent, such as:
- People who may inherit from you
- Medical providers
- Your spouse once you are divorced or, in some states, once you file for legal separation, annulment or divorce