Power of attorney: choosing an agent

CHOOSING the right agent for your power of attorney is a decision that requires a considerable amount of thought.

The agent or ‘donee’ may be restricted by previously established parameters, but they will also have to make decisions without you. While careful planning and implementation of legal safeguards may protect you from the worst scenarios, a power of attorney can still backfire in unpredictable ways. There are many ways an agent can irreversibly transfer your assets in ways you didn’t intend.

For this reason, trust has become the number one factor for people who are looking for an agent to represent them in the event of incapacity. The problem is we may very well trust a dishonest person and trustworthy people are not always professionally competent. Although trust is an extremely important part this decision, it is also an emotional factor not to be overly emphasised in matters of money.

Personal qualities

Because trust cannot be won overnight, we tend to gravitate towards our family members or long-time associates for this duty. If looking outside your immediate pool of acquaintances, be sure to seek out credible recommendations and the professional hallmarks of dependability.

Integrity, loyalty and respect for your confidentiality are crucial characteristics in an agent. Make sure potential agents are willing to perform the duties of the donee before you officially appoint them. Because age-related incapacity is a distinct incentive to create a power of attorney, it may be best to avoid agents who are older than yourself.  

Remember if no single person emerges as an ideal agent, you may simultaneously appoint multiple agents. These donees may be required to act jointly, thus establishing a system of checks and balances which minimises the weaknesses of individual agents. If you nominate only one agent, consider appointing a backup agent who can serve if your first choice becomes unavailable.

Professional qualities

While the trust that comes with a close personal contact can be a great solace in a power of attorney arrangement, it may also cause a breakdown in professional impartiality. Lawyers and accountants will usually charge fees but are less likely to encounter a conflict of interest when executing affairs according to your wishes.

Professionally, your agent must be competent in all areas relevant to your finances. If your managed assets are complex or you have a specialised portfolio, your agent needs to be fluent and business-like in these facets of investing. Among family members, be sure to consider how they manage their own finances.

An agent must be available both physically and on the calendar. Be sure your agent will be accessible in a pinch, in a locality close to your own and with time to spare for your representation. The role of the agent is demanding and requires accurate recordkeeping and special skills. Like a will, power of attorney is largely about peace of mind, so be sure you’re comfortable that your chosen agent understands your decision-making logic and will follow this model faithfully.