Financial Power of Attorney: What It Means To Be An Agent
If you’re reading this, then you’ve probably been selected to be someone’s financial agent. Congrats! You should feel honored to have been chosen to manage your friend or loved one’s finances. Like many people, you probably haven’t acted as a fiduciary under a financial power of attorney before. Is it a big responsibility? Absolutely. But there’s no need to worry. You don't need to be a financial expert. You got this.
We wanted to write this guide to help family members or friends like you who’ve been selected to be a financial agent. We’re confident you’ll be able to keep it under control, but we wanted to make sure you have everything you need to navigate someone else’s finances. It won’t be much different from managing your own, except you’re going to have to be a bit more careful.
Just to clarify, this guide doesn’t give you any legal advice, and is only intended to give you an idea of what the responsibilities and duties will be like as an agent. We don’t want you to run into issues down the road, and simply want you to have a clear set of guidelines.
Well, let’s get started.
What is a financial power of attorney?
A financial power of attorney is a legal document that allows someone of your choosing to handle your finances—such as paying your bills, filing your taxes, and managing investments if you are unable to do so due to an accident or illness.
What does it mean to be nominated as a financial agent?
If you accept the role of a financial agent, then it's your responsibility to handle the "principal's" financial affairs if they ever become incapacitated or hospitalized.
First and foremost, you must be trustworthy, honest, and always act in the best interest of the person who’s money you’re managing, a.k.a the “principal”. Considering you’ve been selected, you probably fit those qualifications.
Read The Details Carefully
Read the financial power of attorney document carefully
- Understand what limits you have as an agent.
- Understand when the document becomes effective.
- Follow the instructions left to you in the document - don’t try to do anything beyond what the instructions state in the document even if you feel strongly about the decisions.
- Your duties and responsibilities as a financial agent are only valid if the person who nominated you was healthy when signing their legal documents.
If possible, sit down with the principal
- Discuss the types of decisions you’re going to need to make - this can help you get a better understanding of his/her financial wishes.
- Review any previous financial statements they may have available - this can help you get an idea of what their expenses are for things such as medical bills, insurance, rent, etc.
If you can’t sit down with them due to incapacity, try to figure out exactly what your principal would’ve wanted if you can’t directly speak with them. It’s your fiduciary obligation to always act in their best interest.
Immediately contact all the principal’s known banks to provide them with the financial power of attorney document. Remember, not the original document. Instead, make a certified copy.
- If you run into any issues with financial institutions, ensure you speak to a manager or supervisor who can assist you.
- Otherwise, speak to a professional estate planning attorney who can easily help resolve these issues.
What A Financial Agent Can’t Do
Being a financial agent is a serious responsibility, and we know you're going to always do what's best. However, we also want to make sure you know what you cannot do or need to avoid as an agent.
- Don’t borrow, loan, or give money away to anyone.
- Never give away the original document to anyone.
- If necessary, make certified copies of the document.
- Do not alter any documents or wishes that your principal has written.
- Don’t allow family members or friends to alter the documents.
- Do not compensate yourself for your duties unless it states to do so in the legal document.
- Don’t steal money or commit fraud.
- Don’t spend your money and then pay yourself back using the principal’s accounts. This makes it difficult to maintain records.
- Never deposit the principal’s money or investments into your own account.
Be Diligent With Finances
You’re a smart person so always use good judgment. Make sure you always act in the principal’s best interest.
- Keep a record of all transactions you make as an agent. Making a monthly summary can make it a bit easier to manage.
- Be more careful than you normally would be with your own money.
- Make sure you separate the principal’s records from your own.
- Keep all accounts separate. If the principal already has joint accounts, then contact a professional attorney before making any changes.
- Pay all bills and taxes on time every month.
- Avoid paying in cash. If you must, then keep copies of all receipts and transactions.
Make a list of all property, assets, and debts your principal has. This includes:
- Bank accounts
- Real estate
- Government benefits
- Insurance policies
- Stocks and bonds
- Jewelry and valuable items
- Debts, unpaid credit cards, medical bills, etc.
Manage More Carefully Than Usual
- If you’re going to be investing, talk to a financial advisor beforehand. Make you interview the professional and check their professional qualifications.
- Always use the principal’s funds to make payments for them, never your own.
- Sign all checks and other documents as an agent.
- For example, you might sign “Tyler Perkins, as agent for Mia Thermopolis.” Never just sign “Mia Thermopolis.”
- If you need legal help, contact a local estate planning attorney who is familiar with the laws of your state. We’re more than happy to connect you to one of the attorneys in our network if necessary.
- Cancel any policies that you feel may not be necessary.
- Attempt to collect any debts owed to your principal.
Make sure the principal’s assets, accounts, or valuables are not accessible to others.
- Make sure all valuables are in safe deposit boxes.
- If possible, make sure all online account passwords are changed.
- Make sure locks of all homes are all changed.
Remember, the law requires you to manage money and property for the principal’s benefit, not yours or anyone else. You’ll do just fine! Feel free to reach out to our team at firstname.lastname@example.org if you ever have any questions.
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