Power of Attorney – Risks and Precautions
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Granting power of attorney to someone is a risk that many people, if they can, prefer not to take. No matter how sure you are of someone, there are unfortunate cases where someone granted power of attorney abuses the position of power.
The unfortunate fact is that you can never be sure, and this is the major difficulty of appointing someone to act on your behalf with power of attorney. The technical term for this is appointing an ‘agent’ or ‘attorney-in-fact’. Power of attorney is an all or nothing situation, you cannot authorize some things and not others, and there is no absolute way of being sure your best interests are being served.
By granting power of attorney, you are giving someone permission to act as you entirely. Everything that you can say, do, sign or authorize; they now can. This is what makes it so extremely risky. Some people try and avoid this by squirreling money away in an offshore account that they keep only very private records of, and never make their attorney-in-fact aware of these assets. This is an extreme course of action and one that is likely to fail; someone with power of attorney can request any financial information held on you, including your tax details. Money is inevitably located.
Although the major difficulty with power of attorney is the worry over being stolen from, there are other things to consider before agreeing to appoint an attorney-in-fact. Your agent will be able to make decisions for you; and this includes giving gifts, buying and selling stocks and assets and other forms of investment. Your agent, with the best will in the world, could make a poor business decision and invest in a bad company, and as a result you lose large amounts of money. They could even technically bankrupt you.
It therefore becomes essential that you chose not only someone you can trust, but someone with a little sense. If possible, try and pick someone like-minded, who you genuinely believe will act as you will in any given situation. If you do have stocks and investments, ensure your agent has regular meetings with financial experts that you trust and have experience with. They can’t stop all bad decisions, but an experienced broker or trader can probably prevent the worst from happening.
Another issue that may be worth considering is that your agent can actually vote on your behalf. If you are strongly politically minded, remember that they may be able to vote for a party or issue that you staunchly disagree with – and in your name. If you fear this may be an issue, consider choosing someone of a similar political affiliation or, better yet, someone apolitical.
Sadly, all you can do is minimize the risks; absolute prevention is impossible. Make the best decision regarding who you choose for your agent, and then inform your friends and family. If they suspect that the agent is acting incorrectly, illegally or against your wishes, they can apply to a lawyer for the power of attorney to be revoked. They will need to have some proof of why they believe this; but often, mere investigation will stop most agents acting incorrectly.
Remember, the vast majority of agents act absolutely as you would wish, and have only your best interests at heart. But the saying is true; you can never be too careful, so take all the precautions you can.
Disclaimer: This article is for informational and entertainment purposes only, and should not be construed as legal advice on any subject matter.
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Source by Melissa M Gordon
