Have you thought of giving someone power of attorney over your finances?
Contrary to the popular myth that a power of attorney (POA) is only necessary for old people, there are times when you may need to give a trusted individual discretion over your finances regardless of your age.
When do you appoint a power of attorney?
Generally, you appoint a specific person to be your POA in case you become unable to make decisions. Apart from a situation when you are very old, severely disabled, or sick, “unable” can also mean when you are away on a cruise without internet or just too busy to come into the office and sign forms.
A power of attorney can apply to assets or health care. In a financial context, the term often used for power of attorney is “trading authority,” though this generally only applies to a specific account rather than all of your assets. Here, the idea is that you would allow someone else to make trades or changes to your account on your behalf. Depending on the type of account you have and your family circumstances, there are different kinds of trading authority to choose from.
Which kind of trading authority is best for me?
If you are thinking of appointing an agent to handle your finances on your behalf, should you give him “full” or “limited” trading authority? What’s most appropriate in your given situation? You also need to decide very carefully who should be your agent – a close relative or a trusted friend.
Once you appoint someone as POA/trading authority over your account, it is a good idea to periodically review your decision and change your selection if necessary.
If you would like to know more about trading authority or POA and the issues that you need to consider when choosing a suitable person, watch this two-minute video (and be sure to speak to a lawyer, since this article does not constitute legal advice): profile-financial.com/poa
Douglas Goldstein, CFP®️ is the director of Profile Investment Services, Ltd. www.Profile-Financial.com He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation on how to set up your American assets to meet your financial goals. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
Published September 21, 2015. Updated February 2020