This is a very good question. We discussed earlier in the month Executor Blog about who one should name as the personal representative of their estate, and you would think the answer would be the same. It is and it’s not.
While both the personal representative and an agent under a Durable Power of Attorney (DPOA) should both be fiscally responsible and be able to communicate well, the agent under the DPOA should also be someone that you have the utmost trust and respect for, and someone who should understand your wishes and desires because this person is someone who may be acting on your behalf during your lifetime. The agent under a power of attorney is someone who steps into your shoes and whom you give the power to do, almost, anything you can do. For instance, your agent can sell a car, a home, or other property. The agent may be able to access bank accounts, sign a contract, or even handle your investments.
There are some powers that an agent cannot do unless you personally sign or initial those powers. These are known as “super powers” and they include:
- The power to create an inter vivos trust (a trust during your lifetime)
- The power to amend, modify, revoke or terminate a trust created by you or on your behalf if the trust specifically allows for this by your agent;
- The powers to make gifts
- The powers to create or change rights of survivorship
- The powers to create or change beneficiary designations;
- The power to waive your right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan; or
- The power to disclaim property and powers of appointment.
These “super powers” give your agent a great deal of authority to act on your behalf. You can see why it is important to appoint someone that you trust, and someone who understands your estate plan, wishes and desires.