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A durable power of attorney is one of the most important estate planning documents and can save your family (and you) from problems and expenses if you become unable to handle your own affairs as a result of illness or accident. In your durable power of attorney, you can name one or more agents (sometimes called “attorneys in fact”) to step in and act for you on legal and financial matters in the event of incapacity.
Although everyone over the age of eighteen should have a durable power of attorney, having someone you trust to act on your behalf is paramount. Who to name and whether you should have more than one agent is an important discussion to have with your planning attorney.
Consider the following scenario as an example –
Jack, age 88, has two daughters, Laverne and Shirley, both of whom are capable and willing to act for Jack if needed. Jack’s initial thought was to name Laverne, his eldest, as agent and Shirley as a successor (ie, if Laverne is unable or unavailable to act). He showed some concern, however, that Shirley’s feelings would be hurt. Another concern of Jack’s (and Shirley’s) is that Laverne lives in Milwaukee and himself and Shirley live on Long Island.
However, if you have the right person, where that person lives is usually not a problem. In this age of emailing, faxing and overnight delivery, distance is generally not a concern.
The priority in choosing agents is having people you trust, but it is helpful if they are organized and financially responsible themselves. It is also important that there be communication and trust among the agent(s) and other family members. Lack of communication with other family members may lead to suspicions and accusations of misconduct, even if there isn’t any.
Sometimes clients are concerned that if they name one child on a power of attorney it may look like favoritism and that the parent trusts one child over the others. So they may ask about naming more than one child as agent. This can solve some of the communication issues since all agents will have access to financial accounts and information. It’s also less likely that the appointed agent will abuse her power if she knows there’s oversight from others.
But appointing more than one agent raises questions as well. For example, is there a limit on the number of agents? We generally prefer no more than two agents at a time. Otherwise, the need to make decisions together can become cumbersome. Also, should the agents be able to act independently or should they be required to act together? Unless the client has real concerns about his agents acting without consulting one another, we typically recommend that the agents be permitted to act separately which allows for more flexibility. It will be much more efficient if either agent can write checks, deal with financial institutions and sign contracts. The necessity of two signatures on every check and document will make it difficult for the agents get anything done, especially if one or both of them travel or are busy with work. On the other hand, it does provide a check and balance.
Successor agents can also be problematic since the bank or other financial institution is going to want to have proof that the first agent cannot or will not act and why. It’s not always clear what evidence the bank will accept.
Clearly, every situation is different and requires a different solution. But here are a few rules of thumb:
– First and foremost, appoint someone you trust
– Consider appointing two people if that will make it easier to carry out the duties
– Provide that each agent may act separately unless you feel a real need for checks and balances
Now – contact an experienced estate planning attorney to help you execute a durable power of attorney so that one or more people will be in place if you become incapacitated due to injury or illness. This will save you (and your family) from unnecessary expense and frustration.