Today we continue our discussion of the financial power of attorney in Colorado estate planning. Specifically, we will touch on what is important to consider as you decide whom to name as your agent.
For many people, a spouse, other family member or close friend is a good choice, especially when the main assets support the family or the principal as an individual. For example, a principal may face older age and need to name an agent to take over paying bills and expenses should cognitive problems arise.
Another scenario could be a married parent of young children who executes a power of attorney so that in case of an accident or illness that causes incapacity, even temporarily, his or her agent can step in and see that the household continues to operate smoothly and that the family’s financial needs are met.
A third possibility is a wealthy principal who not only needs personal bills paid and loved ones supported, but also investments managed and business interests protected. This kind of principal may want to consider naming a professional fiduciary as agent.
Characteristics of a reliable agent
Whatever the scenario, the principal should consider these traits in a potential agent:
- Familiar with the principal and his or her family’s needs and values
- Ability to handle the responsibility
- Experience with the types of assets he or she will manage
Agent duties in Colorado
Colorado law discusses the legal duties of an agent in detail, including:
- Follow the principal’s “reasonable expectations,” if known
- Act in the principal’s best interests
- Act honestly and in good faith
- Stay within the scope of delegated authority
- Act with loyalty for the benefit of the principal
- Avoid conflicts of interest to maintain impartiality
- Use “care, competence, and diligence” at a level “ordinarily exercised” by other agents in like circumstances
- Keep financial records
- Work in cooperation with the person who has health care decision-making power for the principal
- Try to preserve the estate plan established by the principal, if known, and if in the principal’s best interest and considering relevant factors like tax consequences and establishing eligibility for public and other benefits
- And others
Of course, your choice of agent will depend also on the kind of powers you intend to give the agent and the complexity and type of assets he or she will manage. In our next post about POAs, we will look at the kinds of powers a principal can delegate to an agent under Colorado law.