• May 15, 2017

The Dangers of the Power of Attorney

The Dangers of the Power of Attorney

The Dangers of the Power of Attorney 1024 682 Patrick J. Thomas Agency

Granting Power of Attorney to someone (an agent) is not an easy decision. That is because you are trusting them with your financial or medical decisions, and essentially your personal wellbeing. When an agent has a Power of Attorney over someone, they are responsible for day-to-day financial responsibilities like paying bills and purchasing necessities. If they are appointed to act as a decision maker for medical situations, they can make the call regarding your treatment, as well.

This appointment is meant to protect a person who may one day become incapacitated and unable to make these decisions on their own. But because of the amount of power and trust you are placing in the hands of an individual. There are some risks involved, which can include:

It Could be a “License to steal”

Giving authority to others to control medical or financial areas opens up the possibility for a person to take advantage of their position. Since they control the finances, they can use it to steal money and enrich their own lives.

To mitigate this risk, you can speak with an attorney about designing a Power of Attorney that is flexible, allowing you to limit the decisions that the agent has over your decision. For example, you can grant them the ability to pay your bills, but not to make financial investment decisions with your money.

Power of Attorney Can Give Broad Authority

Some Power of Attorney documents are written so broadly that they give the agent more control than they were meant to have. This can extend to a person’s financial assets. If a person has complete control over insurance policies, retirement plans, bank accounts and other assets, they can change beneficiaries as they see fit.

There is Little to No Supervision

It is up to a person, or friends and family members, to watch over the person who is appointed to act as an agent. Unlike guardianship and personal representative, the courts generally do not get involved in cases involving Power of Attorney (unless there is provable fraud). Because of this, agents have free reign to wield the responsibilities that are given to them.

Who to Appoint

Remember that Power of Attorney is only as safe as you make it. Make sure to only appoint a trusted friend or family member as an agent. You also want to work with your attorney to draft a Power of Attorney document that clearly defines the financial or medical decision-making powers you wish to grant. Doing so will limit the chances of abuse or mismanagement taking place.

Disclaimer: this is for informational purposes only and is not intended to be legal advice. If you need legal counsel, please contact an attorney directly.