It can be unpleasant to think about passing away or becoming incapacitated. However, failing to make plans if either of these things happen can prove to be a costly and painful mistake. One significant consequence could be that someone you do not trust or know could wind up making financial decisions on your behalf.
A financial power of attorney (POA) empowers you to appoint the person or persons who will manage your financial affairs if you cannot do so yourself. This party has the power to protect you from abuse, ensure you receive appropriate care and preserve your estate plan. Thus, choosing the right person is critical.
Traits of an effective agent
When you are thinking about who to name as a POA agent, consider someone who has the traits of someone who would handle the role well.
Often, a person who can be an effective agent is someone who is:
- Capable of understanding complicated financial matters
- Invested in your best interests
- Familiar with your wishes, values and beliefs
A spouse, sibling or parent can fit these criteria, so people typically assign them as a POA.
On the other hand, some traits make someone a riskier option for an agent. You may not want someone in this role if they:
- Are struggling with personal debt
- Are addicted to gambling, drugs or alcohol
- Are very young
- Have strained relationships with you or those closest to you
- Have values or beliefs that do not align with yours
- Have a history of abuse
People with these traits may not be capable of or willing to make sound decisions in your best interests.
However, even if you don’t have someone in your life with all the positive traits and none of the negative ones, you still have options. One solution could be to name co-agents who act alone or with each other to make financial decisions.
Consequences of not appointing a POA
If you do not appoint a POA, an Ohio court can put a guardian in place if you can no longer manage financial matters. This party may not be the person you would have chosen. You could wind up in a place you do not wish to be or targeted for financial abuse.
Thus, think carefully about who to grant these powers and then formalize your decision in a legally valid document.