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Using a Person Designated as Power of Attorney to Manage Your Affairs Thumbnail

Using a Person Designated as Power of Attorney to Manage Your Affairs

Giving someone the ability to manage all your finances is a scary proposition. This person will have the ability to act for you in all matters, which also gives them the ability to access your financial resources for their benefit. In addition, you have to trust that he or she will do a good job paying your bills, reconciling accounts, and managing your investments. How can you make certain they will perform correctly and act in your interest?

Pick a trustworthy person

Make certain you pick a person whom you trust completely, is organized, and can do a good job managing your affairs. Ideally, you want someone who personally cares about you and your well-being, such as a family member or close friend.

If you have someone you trust but they are not well organized or financially savvy, require that they hire a fee only fiduciary adviser to help them manage your finances - this provides professional expertise and ensures that the person who knows and loves you is making the decisions in your best interest.

If such a person is not available, consider hiring a professional to help you, such as trust company or an attorney. Although costly, this will help protect you and make certain your affairs are managed correctly as you age.

Simplify your financial picture

You do not want your financial surrogate to walk into a disorganized hornet's nest. Simplify your assets as much as possible, use financial aggregation software for easy tracking, and share all your information with your surrogate well in advance of the need for them to step in. Create policies and written procedures about how your assets will be managed and your financial affairs handled.

Have someone watch the watchers

Although one person will be in charge of your affairs, it is best to provide your entire family with information about your financial picture and how it is being managed. This will reduce family conflict when the need for your care actually occurs. Additionally, the more different people are looking in, the less likely fraud and abuse will occur.

By being proactive with the person you designate as your power of attorney, you should improve the chance that your finances will be handled correctly through your lifetime.