Written by Jonathan Breeden
When you are unable to make crucial decisions for yourself, whether that be financially, medically, or otherwise, a power of attorney is a legally binding document that allows someone else to make decisions on your behalf.
However, there are many situations in which agents acting as power of attorneys can misuse and abuse their power.
Depending on the circumstances of your case, misuse of a power of attorney can occur in virtually limitless situations. Most cases of abuse come down to a breach of the agent’s fiduciary duty. This means that the person you select to act as your power of attorney must act in your best interest. When agents fail to uphold this duty, you could have grounds for a lawsuit.
Agents commonly abuse their power by taking advantage of you financially. They could take control of all your assets, including the money in your bank account.
Power of attorney abuse isn’t a hopeless situation and can be avoided. Fortunately, you can take steps to protect yourself when you decide to assign an agent to act as your power of attorney.
Assigning a power of attorney can be beneficial when you can no longer make decisions for yourself. Here are four tips to prevent the power of attorney misuse:
Not everyone needs a power of attorney. It is essential to consider whether having a power of attorney is appropriate in your case. For example, if you are a young family just starting out, having certain powers of attorney in place may be more appropriate than others.
Assigning healthcare directives instead of a medical power of attorney could be a good alternative. To avoid unnecessary risk, you should never assign a power of attorney unless you need to.
Another way to protect yourself is by preparing your power of attorney but not signing it. Having your power of attorney in place and ready to be signed protects you if you become unable to make decisions for yourself. However, signing it before this becomes an issue increases the likelihood that the agent could take advantage of you during your greatest time of need.
Your power of attorney should never be permanent. Many families find that reviewing the power of attorney details and other estate plans semi-regularly can ensure that any updates can be made as necessary.
Your attorney can include an expiration date for the power of attorney to expire. That way, the existing power of attorney will no longer be valid after the intended expiration date if you do not renew your power of attorney.
You may be surprised to learn there are various types of power of attorneys.
The general power of attorney allows the agent to act essentially like you. They can register a vehicle in your name, use money in your bank account, sell your home, and make other important life decisions.
However, a special power of attorney names specific actions that the agent is authorized to do. For example, they may be legally authorized to make specific financial decisions regarding your children’s care but not be able to access the life inheritance you set aside for them.
Make sure you choose the power of attorney that meets your needs to reduce your risk of power of attorney misuse.
If you are interested in assigning a power of attorney but want to avoid being taken advantage of, it’s essential to work with an experienced estate planning attorney.