An attorney-in-fact is the person you designate in your durable power of attorney to make financial and legal decisions on your behalf. In case you become incapacitated or are unable to make decisions for yourself. People tend to procrastinate on preparing these documents because “someday” they will get around to it. Waiting until you NEED a power of attorney can call into question whether you were of “sound-mind” when you executed this document.
If your mental state is questionable at the time you execute your power of attorney, you could end up in a guardianship proceeding (the very proceeding you were trying to avoid by planning ahead and having these documents ready). You should not assume that your spouse has the legal authority to make decisions on your behalf, because they do not without the proper documentation. Furthermore, if your children are not your spouse’s children your family could end up in litigation to determine who is in control of your money. The time to think about this is NOW and the time to talk about these issues with your family is when everyone is in a relaxed state, there is no impending emergency or surgery and everyone can have an open dialogue.
Who should you choose as your Attorney-in-Fact?
Considering your power of attorney is valid until you pass away, this is a serious decision.
By executing a power of attorney you are authorizing someone else:
- to have access to all your financials,
- sign your checks,
- prepare tax returns,
- make decisions regarding your retirement benefits,
- even run your business.
Not only should you keep the suggestions listed below in mind, you should re-visit these suggestions every year. Relationships change, people move, new family members are born (or pass away), someone who you think will be a great attorney-in-fact may have issues that arise in their life that make them a lesser ideal choice. It is essential not just to have estate planning documents but to be interactive with them, to know what they say, know how they affect your life and know when you need to update or change them.
Questions about power of attorney to keep in mind when choosing an attorney-in-fact:
- Is this person trustworthy? Loyal? Do they have good judgment when it comes to financial decisions?
- Are they healthy mentally and physically? Do they have any kind of addictions or personal issues?
- Are they a family member? Do I trust them to act alone or should I designate two people to make decisions together?
- If my attorney-in-fact is unavailable or unable to act. Is there a successor attorney-in-fact I would like to designate to make decisions for me?
As of October 2011, changes in the law require not only to designate an attorney-in-fact. But also to have that attorney-in-fact accept the power of attorney by signing an affidavit. Which means, your attorney-in-fact gains immediate access to all your assets. This is a critical decision that should not be made once. It should be thought-out every year to make sure your wishes remain the same or are updated if they change.