This page addresses some of the most frequently asked questions about making a financial power of attorney or POA. For information on what a financial power of attorney is and reasons to make one, see financial decisions.
Who Can Serve as Agent Under a Power of Attorney?
If you decide you want the protections afforded by a power of attorney, you may have questions about whom to name as your agent. A common question is whether you can name the same person to serve as executor of your will and your agent under a power of attorney for finances. The answer is yes. The same person could also serve as trustee of your living trust.
People often choose the same person to serve as executor, trustee, and agent because it can be hard to find the right person to manage your affairs or settle your estate. One of the most important qualities you should look for in an agent is competency. Your agent should be an organized, detail oriented person with an ability to keep detailed records of financial transactions on your behalf. Another essential quality for an agent is trustworthiness. Your agent will have access to your money, property, and other assets. Also, when choosing an agent, consider how this person will interact with other family members or your business associates, if applicable.
The person you name as agent is under no obligation to serve under a power of attorney. Before finalizing your power of attorney, ask the individual whether he or she is willing to assume this responsibility if necessary. Your POA document should name an alternate agent in case your first choice is unwilling or unable to serve.
Why Do I Need a Power of Attorney If I Have a Will?
A power of attorney is only effective while you are alive. POA's terminate upon death of the principal. A last will and testament only takes effect upon death. A power of attorney and a will are used at different times. The authority of your agent under a power of attorney terminates when you die. The person you appoint as executor of your will has no authority to act until your estate is subject to administration.
Do I Have To Pay My Agent For Serving Under a POA?
The answer depends on the arrangement you make with your agent, which should be stated in your power of attorney document. Before choosing an agent, talk with the person you plan to appoint and discuss compensation. A key factor in whether the agent should be paid is the amount of time that will be required to manage your affairs. For example, if you own a business, have a large investment portfolio, own several rental properties or have other significant responsibilities the agent will need to manage on your behalf, the agent may want to be compensated. If the only work involved is reviewing your mail and paying the usual utility and credit card bills every month, your agent may not wish to be paid.
In many cases, adult children serve as agents for aging parents under powers of attorney. In these situations, adult children typically do not seek compensation because they agree to hold power of attorney so they can watch over their parents' financial affairs. Nevertheless, parents often provide for their adult children to be compensated for serving as agents. This issue can be divisive, especially if the agent's siblings object to funds being taken from the parent's assets to compensate for such services.
If your agent incurs expenses as a result of performing services under a power of attorney, the agent is entitled to be reimbursed, regardless of the relationship between agent and principal.
If the person you name as agent is not a close friend or relative, they will probably expect to be paid. The terms agreed upon by you and your agent regarding payment and expense reimbursement should be clearly defined in your power of attorney form. Consult a lawyer regarding the best way to address this issue.
The Complete Power of Attorney Guide by Linda Asher, Esq., is a comprehensive guide to powers of attorney, including limited, general, and durable, as well as powers of attorney for health care. It offers advice on choosing an agent, how to limit an agent's power, how to revoke a power of attorney, and sample forms. This helpful book also provides in depth information on end of life planning, living wills, DNR's, and right to die cases.
