A Power of Attorney (POA) for financial management is a very useful tool as part of your estate plan. However, placed into the wrong hands, it can become a license to steal.
A general POA gives your “agent” the authority to basically do everything that you could do with regard to your financial assets. Unless it is limited in scope, this means that your agent can sell your home, take out a mortgage on your property, or take money out of your bank and investment accounts. Why would you want to give someone this power?
As a general rule, the reason you want to have a financial POA is to assist you if you become incapacitated and unable to make any financial decisions. Then you chosen agent would assume that authority. However, your agent’s duty is to only utilize your assets for your own benefit — not the agent’s.
It is critical that the agent you select be absolutely trustworthy. Of course, most married couples will choose their spouse as their first choice as agent, and probably name one of their children as second choice. But remember: the vast majority of perpetrators of elder financial abuse are the victim’s children. Sad but true.
It is the children who have the easiest access to the elderly victim and have the most control to cut-off visitation from other family members and friends. “Isolation” is a key ingredient in carrying out the financial abuse. The perpetrator needs to seal off all communication with the elder so no one can find out that abuse is taking place.
Having a valid financial POA is a wonderful tool that can serve to accomplish many tasks that otherwise might require court involvement if an elder is incapacitated and no longer able to make sound financial decisions.