6 tips to avoid power of at­tor­ney fi­nan­cial abuse

Daily Local News (West Chester, PA) - - BUSINESS - Janet Col­li­ton Colum­nist

One of the most com­mon rea­sons se­niors likely hes­i­tate to sign a Power of At­tor­ney ap­point­ing another per­son to act on their be­half is fear of loss of con­trol and ex­ploita­tion. In this re­spect, as an elder law at­tor­ney, I ad­mit some con­flict. On the one hand I have seen in­stances where an in­di­vid­ual be­comes dis­abled with­out hav­ing signed a Power of At­tor­ney, some­thing that can be ac­quired at rea­son­able cost and with min­i­mal ag­gra­va­tion, and there the only al­ter­na­tive is for an in­ter­ested party to file for guardianship. Guardianship is time con­sum­ing, ex­pen­sive even when not con­tested, can limit the in­di­vid­ual’s free­dom, and may re­sult in ap­point­ing some­one the per­son would not want. Guardianship can, how­ever, be the right an­swer in the right case.

On the other hand those se­niors who be­lieve that Pow­ers of At­tor­ney are pow­er­ful doc­u­ments and re­quire thought are right.

Here is how to keep you, the se­nior, in the “driver’s seat” when des­ig­nat­ing an Agent un­der Power of At­tor­ney.

• Choose your Agent well. The num­ber one way to pre­vent fi­nan­cial ex­ploita­tion by an Agent un­der Power of At­tor­ney is to choose your Agent well. In our of­fice we use the “check­book across the ta­ble” rule. This means you would feel con­fi­dent tak­ing your check­book and hand­ing it across the ta­ble to the per­son you are ap­point­ing

and he or she would act re­spon­si­bly, act in your best in­ter­est, fol­low through in pay­ing bills ap­pro­pri­ately, con­sult with ex­perts where ex­pert ad­vice is needed, keep a record of trans­ac­tions, and be scrupulously hon­est when it comes to han­dling your funds and your as­sets.

You should not choose your Agent based only on whether that per­son is your old­est child or whether there would be hurt feel­ings. If your Agent is ex­pe­ri­enc­ing money prob­lems her­self or him­self this might not be the time to ap­point since the stress could be too great.

• Have back­ups. There should al­most al­ways be at least one backup Agent un­der Power of At­tor­ney ap­pointed. If your pri­mary agent be­comes dis­abled or un­avail­able, some­one needs to step up and act.

• Ask ques­tions to tailor the doc­u­ment to your spec­i­fi­ca­tions. Ev­ery Power of At­tor­ney is not the same. You could give un­lim­ited power, lim­ited power, or no power to gift and you should know why in each case. You could give con­trol over han­dling of your busi­ness or cor­po­ra­tion, or not. Gift­ing could be al­lowed so long as your needs have been sat­is­fied and with­out dis­si­pa­tion of your es­tate. Lim­ited gift­ing means $14,000 per per­son per year. That might be too much or not enough. You could give power to cash in in­sur­ance poli­cies for your needs with­out al­low­ing the Agent to change ben­e­fi­cia­ries.

You could have more than one Agent and then spec­ify whether they need to act to­gether or each might act separately. There are pluses and mi­nuses to each. Con­sider rea­son­ably whether your Agents could work to­gether. If you do not know an­swers, you can ask the at­tor­ney. This is why she or he is there in the first place.

• Fi­nan­cial Power of At­tor­ney and Health Care Power of At­tor­ney can be sep­a­rated. One child might be great for health care and another a whiz on fig­ures. The doc­u­ments can be sep­a­rated or the same per­son could act as both but un­der sep­a­rate doc­u­ments.

• Tell other chil­dren where ap­pro­pri­ate. When par­ents de­velop a re­la­tion­ship with one child and others are left out and there is a func­tional fam­ily, it may be bet­ter to let others know at least of the ap­point­ment and your thoughts. Then if cri­sis strikes, fam­ily mem­bers may be more likely to act to­gether.

• Fire when nec­es­sary. You can fire your Agent. Most Pow­ers state the doc­u­ment is ef­fec­tive un­til a writ­ten doc­u­ment is re­ceived by the Agent ad­vis­ing her or him that it has been re­voked. It is not nec­es­sary to go to an at­tor­ney to draft a Re­vo­ca­tion of Power of At­tor­ney al­though it might be best to con­sult with an at­tor­ney if mat­ters have de­te­ri­o­rated.

Fi­nally, al­though this goes fur­ther than Power of At­tor­ney ad­vice, you should be care­ful about who has ac­cess to your debit cards, credit cards, user names and pass­words, and on­line ac­cess to your bank and in­vest­ment ac­counts. The same rules re­gard­ing trust­wor­thi­ness ap­ply. Get help if needed.

Tune in to “50+ Plan­ning Ahead,” a weekly ra­dio pro­gram on WCHE 1520 on Wed­nes­days from 4 to 4:45 p.m. with Janet Col­li­ton, Col­li­ton Elder Law As­socs., PC and Phil McFad­den of Home In­stead Se­nior Care. Janet Col­li­ton lim­its her prac­tice to elder law, es­tate plan­ning and ad­min­is­tra­tion, life care and spe­cial needs with of­fices at 790 East Mar­ket St., Suite 250, West Ch­ester, PA 19382, 610-436-6674, col­li­ton@col­li­ton­law.com. She is also, with Jef­frey Jones, CSA, co-founder of Life Tran­si­tion Ser­vices, LLC, a ser­vice for fam­i­lies with long term care needs.

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