Selecting an agent under a power of attorney (the agent is usually called an attorney-in-fact) is an important step in the estate planning process, allowing you to have someone to act on your behalf if you’re no longer capable of managing your estate. Classically, your agent was supposed to be someone who is not likely to inherit, but these days, clients frequently name trusted family members to serve. Here’s a closer look at what the position entails and how to determine who might be the best fit.
An agent is a person named by the principal (creator) of the power of attorney to act on behalf of the principal. Less technically, an agent is the named person to assist you in taking care of your affairs during your life. If you do not restrict them to serving while you are incapacitated, the agent can act as your right hand at any time.
Your agent must be someone who demonstrates honesty and integrity since they will have complete access to your accounts and assets. They’ll have to keep careful records and statements documenting their actions to prove that their decisions follow the owner’s wishes. Any transaction that occurs outside their instructions will cause the court to hold them liable for a breach of their duties.
The main focus of the agent's position is to manage finances, such as daily banking needs. As a result, the agent should know or have a ready list of the accounts and account managers (such as financial advisors) to be able to easily step in and make competent decisions. Agents that don't have a ready list will have to spend time playing catch-up to make sure they don't pull funds from the wrong location, miss important deadlines, and the like.
To reduce disputes among family members, the principal is frequently advised to introduce the agent to the rest of the family. Often, this can be accompanied by an explanation to smooth over family dynamics. For example, a principal may explain to the children that they picked the agent based on age ("she's the eldest"), proximity ("he's the one in town"), or profession ("she's the lawyer").
No matter the reasoning, the agent should be honest, reliable, and capable enough to understand what they can do on their own and when they need to bring in professional help. If the agent doesn't understand investment strategies, the agent needs to make sure there is an expert like a financial advisor there to advise them on what to do. Likewise, if the agent is unfamiliar with real estate transactions and needs to sell land, they should hire a seller's agent and a real estate attorney to make sure they're getting the best deal.
Power of attorney responsibilities can end once the principal passes away. At that point, the administrator or executor of the estate takes over to wrap up the estate. The principal can also revoke a power of attorney before death, ending the agent's responsibilities. Finally, the agent can resign or become incapacitated themselves. At that point, the successor agent steps up to take the initial agent's place.
If you’re considering a power of attorney, reach out to Trailhead Estate Planning in Signal Mountain, TN. This locally owned law firm provides quality legal counsel and is licensed to practice in Tennessee, Georgia, and Alabama. Owned by attorney Peter Harrison, he offers exceptional customer service and offer a personalized approach to creating a custom estate plan. Call (423) 228-7029 to schedule an appointment, or visit the website to learn more about his services.
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