If you were to become incapacitated, who would pay your utility bills, file your taxes or otherwise manage your financial affairs? If you have not legally named someone to act on your behalf, it may be necessary for a court to appoint a guardian to handle these matters for you. Guardianship is expensive and cumbersome and can easily be avoided by having a properly drafted durable power of attorney.
What is a Durable Power of Attorney?
A durable power of attorney is a written document that allows you to appoint a person who will be authorized to manage your financial affairs in the event that you become disabled or incapacitated. By signing a durable power of attorney, you authorize another person to engage in specified business, financial and legal transactions on your behalf. It is called “durable” because it does not terminate if you become disabled or incapacitated.
Can I Limit the Power Granted to My Agent in My Durable Power of Attorney?
While is possible to expressly limit the powers you grant your agent, doing so may restrict your agent’s authority to act on your behalf and necessitate a need for a guardianship if you become incapacitated.
To avoid the necessity of a guardianship, your durable power of attorney should be broad enough to allow the agent to accomplish your goals. However, because giving an agent such broad powers can leave vulnerable to mismanagement or misappropriation of your assets, you should carefully select your agent.
What Factors Should I Consider When Selecting an Agent?
To ensure your assets are properly managed, you should consider the following factos as you make you selection:
- Character: It probably goes without saying that the person you choose to serve as your agent should be someone you trust implicitly to act on your behalf. That’s why many people appoint a spouse or close family member. If you have any reservations about the character or integrity of the person who are considering, you should select someone else.
- Age: Texas requires that an agent be at least 18 years old.
- Competence: Choosing a person who has difficulty managing his or her own money is a bad idea. If someone cannot handle his or her own financial affairs properly, chances are they won’t be able to handle yours either.
- Organization skills: The agent you choose will need to keep meticulous records of financial dealings made on your behalf and be able to account for all the financial transactions made on the principal’s behalf. So it’s important that the person you choose be extremely organized.
- Schedule: Consider how busy the person you’re selecting is. Is she overwhelmed by work responsibilities? Is he going through a stressful situation at home? If so, that person may not have the time to devote to managing your finances if you become incapacitated.
- Location: Choosing someone who lives close by is ideal. Someone who lives in another state or country may have difficulties managing your finances from a distance.
The person you choose as your agent will have an enormous responsibility to manage your financial and legal affairs if you become incapacitated. So the decision should not be taken lightly.
Selecting an agent who is trustworthy, competent, organized and has the time and ability to act as your agent is essential to ensure that your affairs are handled according to your wishes.