This post is to announce that, due to a change in circumstances, our firm will be moving from Wisconsin to Minnesota. It's a big change, but it's als...
August 25, 2015
It's been awhile since our last update. However, after (finally) getting through a nearly eight month licensing process that includes a C...
May 11, 2016
Jack Johnson Story Highlights Importance of Choosing the Right Agent
November 24, 2014
How does a professional hockey player Jack Johnson, who makes almost $5 million a year, end up going bankrupt? It probably won't shock you to learn that the answer to that question is "by trusting the wrong people." What might shock you is that in this case the "wrong people" were his own parents.
Johnson entered the NHL in 2007, and quickly established himself as one of the best defensmen in the legaue while playing for the Los Angeles Kings. In 2012, he was traded to the Columbus Blue Jackets, who signed him to a seven-year $30 million dollar deal. Of course, such success comes with the question of what to do with all that money. In Johnson's case it meant signing a power of attorney for finances, turning over control of his money to someone he thought he could trust - dear old mom.
Unfortunately, mom turned out to be somewhat less than trustworthy. Instead of managing her son's money responsibly, Mrs. Johnson and her husband used their son's success to live the high life: buying high priced homes, expensive cars, and even leveraging her son's future paychecks against a series of high-risk loans. The result? Jack Johnson having to file for bankruptcy, claiming $50,000 in assets against an incredible $10 million in debt.
Jack Johnson's story isn't just tragic however, it's also a cautionary tale for anyone choosing an agent for a power of attorney. There's no doubt it's a tough choice - the list of qualifications alone can make it hard to come up with names; is the person you are naming as agent trustworty? Do they handle money responsibly and have the knowledge to invest wisely? Are they even willing to accept the responsibility that comes with the position? These are all critically important questions, and being able to answer them is a big factor in determining whether a power of attorney will actually accomplish the goals it's meant to.
Unfortunately, I see a lot of people rush through the process of choosing an agent. Clients often face difficulty coming up with a list of people who meet all the criteria for a good agent. However, rather than steping back and taking the time to carefully consider the issue, many will latch onto the first name that comes into their head - often this is a parent, sibling, or close friend. This certainly sound good in theory. After all, who can you trust more than your family? In practice however, choosing the first person you can think of as an agent usually results in a less than optimal choice, either because the individual is flat out untrustworthy, or because they are simply in over their heads.
So what's the lesson to be learned here? Don't treat naming an agent as a quick or easy decision. Don't treat it as a throwaway decision you need just to get your estate plan done either. Take your time, think about it, consider it carefully. Talk with your lawyer if you need some guidance. Remember that it's your financial future at stake. That's worth more than five or ten minutes of your day.