Choosing a power of attorney & personal representative.
For many individuals, one of the more difficult aspects of estate planning is choosing the person(s) who will have the power to act on your behalf during incapacity or after death. Choosing the right person or persons depends on several factors.
The first factor to consider is the type of power that is given to another person. During a person’s lifetime the power to act for another person is called a power of attorney. There are two types of power of attorneys in Wisconsin. The financial power of attorney (commonly called the durable power of attorney) and healthcare power of attorney. The powers are self-explanatory in that the first allows another person (agent) to make financial, real estate and tax decisions (along with other powers) and the second allows another person (agent) to make healthcare decisions. The powers of attorney, however, automatically terminate at death. The power to act for another after death is either done through executing a valid Last Will and Testament or, if no Will exists, through appointment by the probate court. In Wisconsin this person is referred to as the personal representative and gives a person all of the powers needed to handle the decedent’s estate.
The second factor to consider is the ability of each person to handle the specific powers that are given to them. For married couples the first choice is naturally the other spouse, but this may not always be advisable. Many of my clients have spouses that have never paid a bill or are in the situation where the other spouse is incapacitated. This is where naming alternate or successor agents becomes very important. Many individuals will name their spouse followed by their children from oldest to youngest based upon nothing more than family tradition or what they think is fair. Again, the person that should be named is the one that would be the best to make those types of decisions or has the ability to perform the required tasks. A person can be very knowledgeable in the healthcare field but not very good at handling their own finances, let alone someone else’s. This is where common sense, not tradition or fairness, should be the main factor in choosing your agents and personal representative.
The third factor is choosing the person(s) that have the right temperament and integrity to make decisions that are in your best interest and carry out your decisions at death. This is the “trust” factor and, in my opinion, can override all of the other factors. Who do you trust the most to make decisions based upon your desires and not their own? This is the son, daughter or friend that can manage conflict if it arises and be able to objectively make decisions in your best interest and according to your exact desires without considering their own interests. Even if they are not naturally gifted at administration, finances, or healthcare issues they can always obtain advice and professional services to assist them. Choosing a person based upon tradition, fairness or to prevent “hard feelings” is never advisable due to the importance of the powers and potential negative consequences that could result from choosing the wrong person.