With so much attention on guardianships and conservatorships in the press, the use and abuse of power of attorney documents may escape the spotlight because so many are used in family sit-uations. However, power of attorney abuse is a massive national problem, one that costs its victims financial loss-es estimated in the billions of dollars.
How can you protect yourself?
1. Know what you are signing. The Power of Attorney is often referred to as a “license to steal.” This document gives someone the power to act on your behalf, and depending on the document, they can spend your money and sign documents to sell your home, among other expansive rights. Unlike a guardianship or conservatorship, which is under court supervision—there is no bond required in this private trans-action and no safeguards unless you insist on including them before you sign this document. Talk to a lawyer and understand the risks involved in executing a power of attorney.
2. Review annually at a minimum. Have a licensed attorney review your estate plan and how a power of attorney fits into the overall plan. It may seem easy to download a blank form, but that is not a substitute for speaking to your attorney. Make time for an extensive annual review if not more often. Do not sign a power of attorney piecemeal without prior legal advice. Mistakes happen, especially when people are in a rush. When you are delegating powers to someone else to protect your future, you should insist on a unified plan.
3. Don’t rush. Estate plans take time and there are often many documents involved, so don’t expect it to take merely a few hours. This is a project that needs to be overseen until all of the steps are completed; it is not just the signing of a document. Do you know how to revoke this document if you change your mind?
4. Will your selected agent be com-pensated for their efforts? Are you assuming that your agent will not be paid? This often leads to problems and complaints later on. Taking over another person’s financial transac-tions, the reconciliation of books and records, tax preparation and arranging payments requires a great deal of time. What are you paying your agent for these services? What will the agent expect to be paid for their time? Make sure that you know and that you and your family can understand the agreement before you sign a power of attorney.
5. Usernames and Passwords – Who has them? Do you have a digital inventory of your user names and passwords? Does your agent have this list or do they know where to find it? Where are the hard copies of your account statements? Who has access to those? Is it the same person? Is this information locked up in your home or on display?
6. Safeguards to manage risk – what are they? Have you considered ob-taining a bond on your agent? If not, do you understand there may be no recourse if your assets are mishan-dled? Lawsuits after the fact, often find heirs with no recovery. Does the power of attorney contain language addressing the possibility that a guardianship proceeding is brought on your behalf?
7. Public recording of documents. Have you recorded the power of attorney? Often documents that are executed and kept secret create more isolation for elder clients. If the power of attorney is recorded, public access may help enough to offset the cost to your privacy.
8. Conflicts of Interest. Does your agent have a conflict? If you select one child to act as your agent, leaving another child or children off the doc-ument, have you considered multiple conflicts of interest between them? Will arguments originating from the back seat of your car when they were children interfere with their ability to get along and to put your interests first? Get opinions from more than one professional as well. Understand that a power of attorney works with your other Health Care Directives. Access to you for visitation can be denied by the fiduciaries—such as to a partner who has no legal rights. Look at the Peter Falk Foundation or the Kasem Cares Foundation situation where an individual’s end of life was destroyed by petty refusals to hon-or what was at best common sense. Make sure your document lays out what you want during the end of your life. Form documents do not usually include these types of directions. Have a specific talk with your agent and your family on what YOU expect.
9. Have you considered a professional fiduciary? When there are personal issues in your family, you should consid-er a professional fiduciary; which is not just limited to banks for larger estates. Private fiduciaries with whom you can contract to carry out these duties on a professional neutral basis are often worth the time and expense to avoid potential blowups in the future. You work with them now and make sure that the plan is set up correctly. How is the cost of care covered as an expense?
10. Books and Records. What records will your agent need to maintain your financial obligations? Where are the lists of bills and liabilities that would need to be paid on your behalf? Does your agent know where these records are or have you shown them? Is there a complete list with the user names and passwords, as well as the tax records? Is there a video inventory of your personal items? Have any of the items been promised to anyone specific? Is that in writing? Have you left a clear record of gifts and loans made during your life and any forgive-ness of these? I suggest that nothing be turned over to your agent until you have gone over everything with a certified public accountant and you understand exactly what you want. Also consider—what if the agent refuses to share information with your children? What are their rights?
11. Access and monitoring. Who will have access to your records—such as reconciliation of bank statements? Someone should act as a back-up to review these and track expenditures and balances, so there is someone else looking out for you. Make sure this information is not lying around so just anyone can find it.
12. Family Conflicts with respect to visitation and funerals. There are grey areas. Authority under a power of at-torney ends at death, but what about visitation when you are not feeling well? We have seen many cases when a loved one—who has no legal rights at law such as a girlfriend or boy-friend—is later excluded by the “fam-ily” out of the agent’s own personal interpretation of what is in your best interest. Put your wishes in writing if you know that this could be an issue. One recent case actually involved a sister who buried her mother without inviting other family members. These things happen. Make sure they DO NOT HAPPEN TO YOU.
13. Are your documents integrated into a unified plan and are they in a safe place? Unfortunately there are many situations where legal docu-ments “disappear.” Make copies and make sure they are in a fire-proof and secure location. If your local court has the option to place your will on depos-it, take advantage of this convenience. Only you or your attorney can remove it, and that way it is right where it can protect you best – in court.
Take care of yourself first and make sure the power of attorney you sign is going to protect you and place your interests above those of the agent.
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