There will come a time at which you will need to legally delegate someone to handle your financial matters. This legal delegation, known as a “power of attorney,” is one of the most significant decisions you will ever make. But beware - it can also be a license to steal if put in the wrong hands.
A “power of attorney” is one of the most fundamental legal instruments you will ever create. In fact, everyone upon becoming a “legal adult” (varies by state law) ought to appoint one or more “attorneys-in-fact” to handle financial matters in the event of incapacity. The alternative is an unpleasant (and expensive) adventure in the probate court.
But a power of attorney has an unfortunate downside, especially in the form of financial “elder abuse.” It can become a license to steal.
The problem of abuse by way of a power of attorney is nothing new. In fact, a recent article in MarketWatch took up the matter. The article, titled “Power of attorney: It’s easily abused,” noted that 34% of all elder abuse doesn’t originate with credit card fraud, bogus lotteries, or emails from captive African princes. No, it is due to family members who have access and maybe even the power of attorney to dispose of accounts as they see fit.
The importance of your selection of attorneys-in-fact cannot be stressed enough. This is one of those decisions when the entire family ought to be apprised and alerted to who is going to do what and why.
Reference: MarketWatch (March 19, 2013) “Power of attorney: It’s easily abused”