In my last post, I talked about Power of Attorney documents. I focused on POA for Finances and why you might need one. You can check that out HERE!

So, who will make a good candidate to serve as your Financial POA? Does it really matter who you choose?
Today I'd like to share some pointers on qualities to look for when selecting your financial POA.

Let’s Recall

The POA for finances is someone who will make financial decisions on your behalf. And if you remember, you are on the hook for all those decisions! You will be held accountable for ALL the choices made by your POA, regardless of their intentions.

You are essentially choosing someone to look after some (or all) aspects of your financial situation.

The types of decisions this person is allowed to make are:

Accessing your bank account (this is more than just paying your bills — they can transfer your money to any other account)
Selling your home
Speaking on your behalf with following people:
- the IRS
- your Financial Advisor
- your Accountant
- your Attorney
When someone can legally speak on your behalf, this means they can also make decisions with that person and that account (ex. changing your estate plan).

The ability to perform any of the above-mentioned actions gives your Financial POA significant control over your current financial situation. This is why it's important to give your decision careful consideration.

Here are some tips that I offer my clients when they are unsure who to choose.

Choose someone you trust completely

I want to emphasize this – when you choose your financial POA, don’t just choose someone you *think* you trust. Choose someone you trust completely!!

Remember: Your agent can act on your behalf without telling you!

Once you sign that POA, your agent does not need any more approval to act on your behalf. They don’t need to call you and say “hey, I’m about to take money from your account to pay this bill, is that ok?” Nope! They can just do it!

Make sure this person has your trust and will follow your instructions when it comes to handling your money. Which brings me to my next point.

Choose someone you are comfortable communicating with

Talking about finances isn't your typical dinner conversation! It’s not a topic you usually discuss with others, even those closest to you.

However, when it comes to choosing your Financial POA, communicating with this person about your finances is a MUST! You can't assume they'll know exactly what you want them to do (just because you appointed them as your POA doesn't mean they'll become mind readers!)

It is important to make sure your expectations are CLEAR and SPECIFIC.

For example, in the event you become incapacitated, what are your wishes when it comes to selling your house? Do you wish to sell your house and move into a senior-living facility? Or do you wish to hold onto your house at all costs?

If they are just there to pay your bills, don’t assume they know which bills you have to pay! Write out a list of which accounts need to be paid with dates and timeframes.

This communication becomes especially important if you have signed a POA but are still capable of making decisions (for examples of these situations, check back HERE).

Remember that if you feel awkward discussing your preferences with this person, they probably aren't a good fit to represent you as your POA.

Choose someone who is good with money and finances

This probably seems obvious right?! But, let’s consider this example:

You might have a friend who is very knowledgeable when it comes to finances, and because of this, they invest their own money in the stock market. They keep up with current trends and believe that they are making wise investments. But maybe this isn’t the only reason. Maybe they enjoy the thrill of watching the stock market shoot up and drop back down all the time.

So, even though this person has a wealth of financial knowledge, they may not be the person you want to handle your money.

The best candidate will be someone who isn’t impulsive or prone to make risky decisions with your money.

Choose someone who is responsible

Money and finances are typically things that cannot be delayed, pushed back, or procrastinated. If you were to become incapacitated, your bank isn't going to say, "Don't worry! You can push back your mortgage payment another month!" Nope.

Unfortunately, even in a situation like this, your finances don't work this way. It would be best to chose someone who is responsible enough to know what bills you have and when they need to be paid on time.

Narrowing the List Down

Maybe you know someone who possesses all of these qualities, maybe you don’t. Maybe you aren’t sure. If this is the case, that is OK!

I always recommend making a list of 5-10 names of people who are important to you - your spouse, family, friends, and coworkers. Other options include parents (if you are still young) and adult children (if you have them).

You can even include professionals such as your accountant or attorney, but keep in mind that these individuals will almost certainly need to be compensated for their services to you as your agent.

Then narrow down the list to those you can communicate easily with and who you trust the most.

All right, I hope you found this useful! As always, please reach out if you have any questions. And don’t forget to subscribe to get these posts straight to your inbox!

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