A financial Durable Power of Attorney authorizes someone to act on your behalf in financial matters. Properly written, such a document is invaluable in that it allows for necessary financial transactions to be continued in spite of your disability. Obviously, choosing who to name as agent to act for you is a critical decision.
This newsletter discusses that decision. But first, let’s define some terms. The person creating the financial Durable Power of Attorney is known as the principal. The person appointed in the document authorized to act on the Principal’s behalf is known as the Attorney in Fact.
I personally don’t like the term “Attorney in Fact”. It causes confusion. When I discuss Durable Powers of Attorney in client meetings and ask who my client wants to name as Attorney in Fact in his or her Durable Power of Attorney, I usually get the reply: “Surely you don’t mean I have to name YOU as my Attorney in Fact to act for me!”. I then answer: “No, Attorney in Fact means your Agent; not your attorney. And stop calling me Shirley.
Your Attorney in Fact should be someone you trust completely to manage your finances. He or she should be someone who is generally organized; can handle paper work and forms; and in today’s world, is computer literate. In other words, the one you name as your Attorney in Fact should be able to carry out the responsibilities involved.
Your Attorney in Fact might be your spouse, child, sibling, parent, or close friend. There are only a few restrictions as to who cannot act in this role. An Attorney in Fact cannot be under the age of eighteen (18), cannot be disabled or incapacitated, and cannot be a “habitual drunkard”. I doubt you need a law or newsletter from me to tell you not to name a habitual drunkard as the one to manage your finances.
Your Attorney in Fact does not have to reside in the State of Missouri, although geographical closeness may be a practical consideration in your choice. Missouri statutes allow you to name more than one person as your Attorney in Fact. You can also say whether the two have to act together (they both have to sign when acting for you) or can act separately (either can sign). Warning about these options – naming two people and requiring that they always act together can present practical challenges and possible delays in performing needed financial transactions. They both may not be able to meet at the bank, for example. Further, naming two people and giving either the option to act, although technically legal, is frowned on by financial institutions who are asked to honor a Durable Power of Attorney. Many such institutions dig in their heels and refuse to deal with the document unless both named Attorneys in Fact sign off.
The most common and arguably practical approach is to name a first choice to serve as Attorney in Fact and then name a substitute Attorney in Fact if that first choice refuses or is unable to act.
It comes down to who do you trust, availability, and who will best do the job. Select a first choice and then a back-up.