A financial power of attorney (POA) is a crucial document that allows someone to manage your finances should you become incapable of handling them. This includes situations where you are physically or mentally compromised or medically unable to manage personal affairs. In Virginia, you can specify which financial powers and responsibilities to grant. But how do you decide what powers to sign over or limit? Below are three key factors to consider when setting boundaries in your financial POA.
Your relationship with the agent
The person you choose as your agent, also known as your attorney-in-fact, plays a pivotal role in your financial well-being. They have the legal authority to manage your finances, make financial decisions and conduct transactions on your behalf.
However, this depends on the specific powers you grant them in your POA. Make sure to consider:
- How much you trust this person with your finances
- Their familiarity with your financial situation
- Their ability to make decisions in your best interest
While your agent has a legal responsibility to act in your best interests, it is still important to carefully define the scope of their authority in your POA.
The complexity of your financial situation
If you have a straightforward financial situation – perhaps just a checking account and a home – you might feel comfortable granting broader powers. However, if you have diverse investments, multiple properties or business interests, you should be more specific about what your agent can and can’t do.
Consider creating a list of your assets and financial obligations. This can help you decide which areas might require specialized knowledge and where you may want to limit your agent’s authority.
Safeguards and oversight
While Virginia has laws to protect against POA abuse, it is also wise to include provisions that add extra layers of accountability and transparency. Consider:
- Requiring your agent to provide regular financial reports
- Naming a third party to oversee major transactions
- Setting clear record-keeping requirements
These measures can help prevent misuse of the POA while ensuring your agent can still effectively manage your affairs.
Create a POA that truly serves your needs
While this guide provides a starting point, every financial situation is unique. To ensure your POA is comprehensive, legally valid and aligned with your wishes, it’s important to work with an attorney.
