We have spent a lot of time during the past year discussing the importance of a Power of Attorney. Because a Power of Attorney enables your agent to act on your behalf for all financial matters, it is extremely important that you choose an agent that you trust. Effectively, you are giving someone else the power to spend your money, sell your property, and take out new lines of credit in your name. So, how do you choose a power of attorney?
Choose someone who is trustworthy, has integrity, and is good with money.
Your financial agent has a fiduciary obligation to do what is in your best interest, but it is very difficult to get money back from bad agents once they have stolen your assets. Many people put off signing a power of attorney because they fear being taken advantage of or fear their control being taken away from them too soon. These are real concerns, and you should never sign a power of attorney without some deep consideration about your options and potential consequences.
When considering your fiduciaries, it is important to access their capabilities to do the job. For example, if your only child is always asking you for money and can’t manage their own finances, they would not be a good person to be your financial agent under a (General Durable Power of Attorney) GDPOA. Adult children with bankruptcies, mental health issues, substance abuse issues, or just too much on their own plate are not good choices for agents. Sometimes a close friend can be a better fit. Choose wisely!
Choose someone carefully, but do not drag your feet.
Although it may be tempting to put off this important piece of estate planning, most of us over the age of 18 should have a power of attorney in place. And luckily, Georgia passed a law in 2017 that provides us all with greater protections when it comes to powers of attorneys. This law, known as the Uniform Power of Attorney Act, gives us more prosecuting powers when it comes to bad financial agents.
Choose successor agents.
The power of attorney allows you to name a primary financial agent as well as successor agents. These successor agents can act if your primary agent resigns, dies, becomes incapacitated, is no longer qualified to serve, or has declined to serve. It is important to name successor agents in the unfortunate event that your primary agent cannot serve when you need him/her.
In addition to successor agents, you can name co-agents. Co-agents can have equal authority and can act independently if you choose for them to do so. Co-agents can also be required to act in tandem, only being able to make decisions if both co-agents agree on the decision. This is one way of protecting yourself from bad agents–make two people be held accountable to one another for any decision that is made about your finances.
Co-agents that must act in agreement may provide a safeguard, but this situation may also hold up important, time-sensitive decisions that must be made on your behalf. We only recommend co-agents for situations in which no completely trustworthy agent can be named. We occasionally have older adults who want to name two siblings as co-agents just because they don’t want to make one child upset over not being chosen as the financial agent. This rationale, truly, is not a good enough reason to go through the hassles of having co-agents that must act together for every decision. Likewise, having co-agents that have shared authority can make financial decisions a mess. When actions are not communicated, finances can become chaotic. Co-agents are rarely advised.
Consider hiring a professional to act as your agent.
There are professionals who can be hired to act as your financial agent. These attorneys, bankers, daily money managers, etc., can be named as your agent and receive compensation for acting in that role on your behalf. For those without accessible, dependable, trustworthy family or friends, hiring a professional that is experienced, credible, and insured can be a great option.
If you have any questions or concerns about the GDPOAs please contact our office by calling us at (404) 843-0121.
Subscribe to our blog and monthly newsletter.