Power of Attorney -Life-Saver or Life-Wrecker?
One of the first questions I ask elder clients facing financial crisis is “Do you have a power of attorney?” And when I meet with a family to plan ahead for possible disability, one important question I ask is “Who can we trust with your power of attorney?”
What is a Power of Attorney?
A power of attorney is used to delegate legal authority to another person. The principal (the person granting the power of attorney) gives the agent the authority to make legal decisions on his/her behalf, including handling bank accounts, selling real estate, and managing other assets. It is an essential and powerful legal tool to manage and protect assets. It can be used when the person granting the authority is incapacitated or just traveling away from home.
Are There Different Types of Power of Attorney?
A power of attorney can be short and simple or very extensive and run on for many pages. Some are limited to simple banking transactions and real estate transactions. Others include general powers to transact all kinds of business. A careful lawyer drafts a power of attorney to fit the client’s needs. Powers of attorney needed for Medicaid related transactions, for example, must contain express authority for those transactions to be effective.
When Does a Power of Attorney Expire?
In Oregon all powers of attorney are “durable,” meaning that, unless the document says otherwise, the authority granted continues in effect after the person granting the authority becomes incapacitated. When the person granting the authority dies, the power of attorney expires.
How Can A Power Of Attorney Be Abused?
The potential for fraud exists in every power of attorney arrangement, through self dealing, embezzlement, theft and unlawful gifting. In some situations, a power of attorney holder will significantly deplete an estate, leaving the heirs of the principal with little or no inheritance. Other ways of financial exploitation include changing beneficiary designations on life insurance or annuities, and opening bank accounts with joint title or pay on death provisions in favor of the agent. The potential for power of attorney disputes is large and can lead to lawsuits.
Can a Power of Attorney Be Challenged?
If a person doesn’t really understand what he is signing, the creation of a power of attorney can be challenged. If a validly granted power of attorney has been abused by the agent, grounds may exist to sue the agent for the return of embezzled property or for monetary damages. The guilty agent may also charged with a crime. The person granting the authority may sue or, if he/she is deceased, the intended beneficiaries may be able to sue the agent for breach of fiduciary duty, tortuous interference with estate planning, or a number of other causes of action.
I tell my clients that a power of attorney is like a sharp scalpel – one of the most important tools in our legal “black bag.” It can preserve and protect from harm, but in the wrong hands it can make a big mess. It is wise to have an experienced Elder Law Attorney help you create your power of attorney and advise you how to safely use it.
Article Provided by:
Tom Pixton, The Pixton Law Firm
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