Powers of attorney can be an especially tricky legal documents. They are subject to profound financial abuse if the agent selected by the principal to handle his or her financial affairs proves to be incompetent or unscrupulous. Accordingly, even though by law the power of attorney document makes it clear that an agent has a fiduciary obligation to always act on the principal’s behalf, this language cannot in practice stop an unethical agent from treating his or her principal’s funds as his or her own. Often times, once a principal’s accounts have been depleted inappropriately to benefit the agent, it is too late or too expensive to recover the lost funds.
With this forewarning in hand, it is imperative for all adults to select a trustworthy agent and to have a well drafted power of attorney. This is so because there may be times when a person is not available because of travel, illness or mental incapacity to act on his or her own behalf. In such situations, if business, family or legal actions are required, and there is no power of attorney a time consuming and expensive legal guardianship would need to be undertaken by a family member or other close confidant to be appointed legal guardian of the unavailable or incapacitated person.
For a fraction of the cost, a power of attorney can be drafted that becomes effective immediately and authorizes the appointed agent to act with respect to all of the principal’s affairs, provided that the power to make gifts and to make beneficiary designation changes should only be permitted between spouses. Depending on the particular situation, more than one agent can be appointed, in which case one, some or all of the agents can be required to act.
I have drafted many hundreds of powers of attorneys, along with wills and advance health care directives. I have also successfully litigated power of attorney abuse cases. If you would like for me to prepare your power of attorney or want to discuss possible power of attorney abuse, please give me a call.