Creating a power of attorney is a big, but necessary step in the financial planning process. Things can go wrong in life, and if you are suddenly unable to take care of your own financial affairs, you want to have someone lined up who can quickly step in and take over for you if needed. The alternative is a lengthy and costly guardianship process, which is best to avoid if at all possible.
The biggest decision that you will make when creating a power of attorney is deciding who will hold the power of attorney on your behalf, and who will be your "back up" plan for a power of attorney should the first individual be unable or unwilling to serve. Here are the three primary factors to consider when selecting your power of attorney.
Factor One: Trust. By far, the biggest consideration you should take into account when selecting someone to hold your power of attorney is whether that person can be trusted. Preferably, you should pick someone whom you absolutely trust to look out for your best interest, such as a spouse, a family member, or a close friend.
Factor Two: Competence. You also need to pick someone who is wise about handling money. It should be a person who knows how to research purchasing choices before they are made and tends to select the best, most economical option. Some people are highly trustworthy, but also poor at money management skills. These are not the best choices when selecting your power of attorney.
Factor Three: Willingness. Finally, you need to make sure that the person who will hold your power of attorney is willing to serve. Before naming anyone on a power of attorney, but sure to reach out to them to make sure they are willing to do it. Then, once the power of attorney is executed, make sure they have a copy of it so they are aware that they may someday need to take on the responsibility of handling your financial affairs.
You can't afford to spare feelings when making this decision. If someone close to you doesn't fit all three of these criteria, you need to select someone else, even if it may cause some offense. Communicating about what you are doing and why you are doing it at an early stage will often result in less problems down the road. And with the issue resolved in the present time, when you are fully capable of communicating your desires to your loved ones, you can rest easy that the issue will not suddenly blow up at a time when you may also be experiencing a personal crisis.