Choosing your financial agent
August 16, 2013
When you prepare an estate plan, you are often asked to pick someone to manage your finances for you when you are unable or unwilling to do so. This person may be your trustee, the executor of your estate, or your financial power of attorney. Generally, this person will have the responsibility to manage your money and property for your benefit. This means they often have to pay your bills, manage your investments, and file your taxes. They must keep your assets separate from theirs. Depending on what authority they have to manage your finances, they may have to provide reports to others or the court about how they have spent your money.
How do you decide who should be your financial agent? This is a big decision, as your financial agent may be the person who most impacts how and where you live as you age. These are my suggestions for what you should consider in deciding who to nominate as your financial agent:
1. Trust. More than anything else, you must pick someone you absolutely trust.
2. Financial Smarts. Your agent must have the financial savvy to manage your estate, whatever it is. If they cannot understand the basics of your retirement investments and taxes, they you should equip them with the permission to hire someone (like an accountant) to help them manage your finances.
3. Financial Stability. When picking an agent, you should steer clear of someone who has their own financial problems. Avoid picking an agent who has declared bankruptcy, is deeply in debt, or has defaulted on contractual obligations. If they cannot manage their own finances, chances are they cannot manage yours.
4. No Addictions. I also recommend steering clear of anyone who has a gambling or other addiction. The temptation to misspend your money to fuel their addiction can be too great to resist.
5. Good Communication. Finally, your agent should be someone willing and able to communicate with your family or heirs. Although they may not be required to account, a financial agent who talks to your family and heirs about why and how they are spending your money may help avoid family fights or other battles.
Above all, once you have picked a financial agent, be sure to talk to them about your financial position and your wishes. You want this person to be fully informed about what you want so he or she can make the best decision for you.
Cassandra Jones is an elder law and family law attorney in Gardnerville. She can be reached at 782-0040.