How to stay in control when appointing a power of attorney
Disability can strike suddenly and is one of the reasons appointing an agent on your behalf to act when you cannot is so important. 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 No. 1 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 cor
poration, or not. Gifting could be allowed so long as your needs have been satisfied and without dissipation of your estate. Limited gifting means $15,000 per person per year. That might be too much or not enough. You could give power to cash in insurance policies for your needs but not allow the agent to change beneficiaries.
If you want to appoint two agents to act, you need to know whether your bank, brokerage or financial institution will accept two. You also must consider whether they would act well together even if their appointment is feasible or whether they should each have power to act independently.
• Financial power of attorney and health care power of attorney can be separated. One child might be great for health care and another is a whiz on figures. Separate financial and health care powers of attorney could give each an opportunity to participate in decision making if you could not.
• 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. Realize you can fire your agent by serving them with a revocation or by appointing another. If matters have deteriorated it might be best to consult with an attorney.
Finally, you can protect yourself in other ways. 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 when needed.