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You’ll never regret planning for the future. Should you become incapacitated for any reason, it’s important to make sure there’s someone who can help manage your affairs. One of the most popular ways to do this is to appoint someone to have financial power of attorney for you. But not everyone has an obvious choice—you could be aging independently, or lacking family members you trust with this power. What should you do to ensure your finances are in safe hands?
Here’s what to know about who you can—and should—name as agent in a power of attorney, so your assets are safe even if you’re unable to handle them.
What is financial power of attorney?
There are several different types of power of attorney. Financial power of attorney allows someone else to manage your finances while you’re still alive but unable to handle them yourself. More specifically, according to Market Watch, experts typically recommend a durable power of attorney, which goes into effect immediately after you sign the documents and remains effective until you die.
Power of attorney doesn’t mean you’ve relinquished control of your assets; having an agent just means that your agent can also act for you, if need be. The power of attorney expires when you die, and the control of your finances typically shifts to the executor you named in your will (who may or may not be the same person).
How do you choose your power of attorney?
Given the power and responsibility this person will have in regards to your finances, you should appoint someone you trust to have your best interests at heart. In addition to trust, it doesn’t hurt to choose someone who has a solid understanding of your finances and the duties involved. Still, the American Bar Association says the most important quality in a potential agent is not their business acumen, but their integrity.
But what if there’s no one in your life who fits the bill? While people generally appoint family members, you can select anyone above the age of 18 to have power of attorney.
Look around at other people in your community who are willing and qualified to take on this role. This could be a friend, accountant, or perhaps a clergy person. You can even select multiple people to this role, so they can divide responsibilities (just make sure the power of attorney document allows each agent to act independently).
Finally, if there’s no one in your life you wish to grant power of attorney, one alternative is looking into a court-appointed conservator in case you become incapacitated.
How much does power of attorney cost?
One of the major benefits of family members taking on this role is that they likely won’t require financial compensation. If you’re asking a professional attorney to have a durable power of attorney, their legal fees could add up quick—and you don’t know how long you might be incapacitated.
Before agreeing to any flat or hourly rate, do some research. The hourly rate for a family lawyer or probate lawyer averages around $300per hour (per ContractsCounsel’s marketplace data). Depending on how many hours they bill as having acted as power of attorney, this cost could dangerously deplete your resources. Get outside legal advice, and maybe ask for an hourly breakdown for how much time your potential attorney spends managing the affairs of their incapacitated clients.
As Policy Genius points out, if you opt to create a power of attorney on your own, you will typically only pay the cost of notarization. However, AgingCare recommends investing in a lawyer to be present when you create a power of attorney document, since online versions come with no professional counsel, no legal witnesses, no customization, and no quality insurance.
The takeaway
Appointing someone in your life to act as your power of attorney is an important step in any life preparedness plan. You might not have an obvious choice for who should take on this role, but you can consider options beyond immediate family members. Make a list of all the viable options in your community, and don’t discount friends just because they’re the same age or in the same boat as you.
Editor’s note: This is not professional legal advice. Consult with a lawyer before making any decisions about your will, assets, and general estate planning.
