Life doesn’t stop, even when an individual experiences an emergency. Someone involved in the car crash might spend months in the hospital, possibly in a coma. By the time they recover their health, their finances could be in shambles. Landlords may evict tenants who don’t pay their rent, and lenders might take legal action including vehicle repossession or property foreclosure when someone does not meet their financial obligations for multiple months. Particularly when someone is a legal adult but does not have a spouse, they are vulnerable in the event of a personal emergency.
In Michigan, people can draft financial powers of attorney to protect themselves if they become incapacitated. Financial powers of attorney grant a chosen individual the authority to handle financial matters on behalf of someone else. How can someone who is planning their estate select the right agent or attorney-in-fact when drafting powers of attorney?
Conduct, proximity and ethics all matter
Choosing an agent or attorney-in-fact can have major implications on someone’s financial stability in the future. It is therefore crucial that someone select an individual who has a history of being responsible and ethical. Their ability to manage stress is also important. Organizational capabilities and attention to detail are also key characteristics of an agent with financial authority.
Where someone lives is also important to consider. The most responsible person in the world might not be the right choice if they live three states away and aren’t readily available in the event of an emergency. Someone’s willingness to accept the role and their history of following through on their obligations are also key considerations.
Limiting authority can be a wise choice. Financial powers of attorney can be incredibly specific documents. They do not need to grant someone carte blanche access to and control over a vulnerable person’s resources. The person drafting the documents can impose very clear limitations on the use of the authority in those documents. They might limit someone to using funds from one particular financial account and request that they handle certain specific financial obligations. In some cases, people might make the choice to name two or more people to share authority so that there is a degree of interpersonal oversight.
Those putting together comprehensive estate plans and powers of attorney often need to think carefully about their needs and their relationships. After all, choosing the right agent can be a crucial element in creating a protective power of attorney.