The most important document in your estate plan is your power of attorney. A POA determines who manages your affairs if you cannot do so. Having such a document ensures that important tasks are performed, such as investment management and bill paying. This document is also necessary if you have a living trust, as it names successor trustees to manage your property should you become incapacitated.
If fortunate, we will all live long enough to eventually need some form of help due to the side effects of aging. Our estate planning attorneys have put together a list of important steps to follow in order to make sure things go smoothly as you age gracefully.
Carefully Choose an Agent
An agent is an individual designated to act on your behalf according to your POA document. In a living trust, this person is called a successor and should be selected carefully. Consider appointing another individual to share the responsibility as well, who is referred to as a co-agent.
Although this does not guarantee a problem-free arrangement, since co-agents can also conspire against you, it may offer an extra layer of protection.
Talk to Your Bank
Many financial firms, brokers and banks have their own standards, rules, and regulations regarding honoring POAs. You should work with your estate planning attorney to make sure that they are aware of your bank’s policies and procedures and are drawing up your documents accordingly.
Throughout history, agents acting as POAs were not accountable to others unless a court complaint was filed. However, according to the Uniform Power of Attorney Act, agents are now required to show relatives your records if they are asked to do so. This Act is currently on the books in 25 states.
One simple way to establish oversight is to require that one or more trustworthy individuals to have online or hardcopy access to your account statements. These individuals can monitor your agents’ performance and look for red flags.
Additionally, a protector can also be used in numerous states and this is becoming more and more common with estate trusts. Protectors are entitled to review actions taken by your agents or even replace agents. However, a protector may also initiate collusion or abuse. Therefore, this person must be chosen with care as well.
Be Crystal Clear
Make sure you clarify your intentions. To supplement the POA, you can draft a letter outlining what the agent trustees should do and not do. The letter should be signed by both you and the agent. Even though it may not be legally binding in most states, it is likely to affect the agent’s actions and serve as court evidence if necessary.