When choosing a power of attorney agent, many people make what they think is a reasonable choice and name their eldest child or their closest friend. If you, as the principal, are considering this move, think carefully before you move forward. Are you making this decision because you genuinely believe the person you picked will efficiently handle your financial affairs or because you are afraid of hurting that person's feelings if you choose someone else?
A power of attorney is one of the most important designations you can make in your estate plan. Your agent will have control of your finances, your assets and your wellbeing if you should become infirm or incapacitated. Many famous and powerful people learned a very hard lesson after making a careless choice for their power of attorney.
Don't rush the decision
If you sign a durable power of attorney, your agent will have access to your finances immediately. It is not uncommon for a principal to designate a close relative to be the agent of a durable POA only to find that within a few months, the agent has drained the bank accounts, stolen the assets and placed the principal in a nursing home. You may want to take your time while deciding, spending as much time with your candidates as possible and introducing them to your financial affairs.
In addition to a careful selection process for your agent, you may consider some of the following safeguards:
- Co-agents: Selecting more than one person to be agents requires that all agents approve every decision. While this is an improvement over a single agent, it also delays decision-making and does not prevent the two from acting together against you.
- Bank protection: Clarify the standards of your financial institutions for honoring POA actions.
- Oversight: Require your POA agent to submit periodic reports to family members, your accountant and your attorney to ensure he or she is abiding by the fiduciary duties as an agent. Similar to this is the appointment of a protector who oversees the actions of the agent.
- Instructions: Include in your estate plan a letter that details the actions you expect of your POA agent and those you forbid. Your agent's signature on this letter can be evidence that there was an understanding between you.
Don't be afraid to re-evaluate your choice of agents. Circumstances and people change, and you have every right to select a different POA agent if a better choice emerges. Additionally, you have the right to seek the advice of a Texas attorney if you ever suspect your power of attorney agent of breaching his or her fiduciary duties.