Financial powers of attorney designate an agent to oversee an individual’s bills and financial obligations during an emergency. When a person cannot manage their own affairs, the agent or attorney in fact they selected can assume responsibility for paying their bills, managing their property or even running their small business.
Individuals with significant resources may worry about others abusing their power of attorney for personal enrichment. Including appropriate restrictions within powers of attorney can help diminish the likelihood of misconduct.
All three of the inclusions below can help protect the principal when drafting powers of attorney.
1. Adding a necessary event
Springing powers of attorney only take effect after a specific qualifying incident. Requiring that an individual remain incapacitated for a minimum amount of time is one way to limit the possibility of an agent abusing their authority during a short-term emergency.
2. Limits on financial access
The principal can limit their agent to specific financial functions that are critical for the protection of their resources. Their agent could have access to a single account for the sole purpose of paying a mortgage, student loans and credit card bills until the principal recovers. Reducing the ability to transfer and liquidate assets can diminish the likelihood of abuses.
3. The establishment of a trust
In cases where an agent may require broad access and authority to manage a person’s affairs, arranging to transfer especially vulnerable property to a trust under the control of a different trustee can be an important step. Trustees manage trust resources, while the agent named in financial powers of attorney takes responsibility for matters not already delegated to the trustee.
People concerned about the possible abuse of authority by their agents may need assistance reviewing and updating existing powers of attorney or drafting documents that are appropriately protective.