Creating a power ofattorney is a very important component of your estate plan and steps should betaken to ensure it is not ever misused. A power of attorney allows a person youappoint -- your "attorney-in-fact" or "agent" -- to act inyour place for financial purposes when and if you ever become incapacitated. Whendeemed as lacking the necessary capacity to manage your own affairs, the personyou choose will be able to step in and take care of your finances.
Unfortunately, it is notpossible to entirely prevent the possibility of abuse, but here are 4 tips toreduce the chances:
Tip#1: Make sure you appoint someone you trust as your agent. You must feelconfident that this person will keep your best interests in mind at all times.If you do not have any family members or friends that fit this bill, there isalways the option to choose a professional such as an accountant, bank or trustcompany.
Tip #2: Name a trustworthy back-up orsuccessor agent as well. Be clear in your power of attorney document about whenthe successor takes over.
Tip #3: Very important! Add a clause inyour power of attorney document that requires your agent to provide anaccounting to a third party on a consistent basis. This does not have to beformal. The third party could be another family member or friend. Havinganother set of eyes on all the transactions is the best way to prevent an agentfrom exploiting a principal.
Tip #4: Discuss the powers beingconveyed very carefully with your estate planning attorney to make sure you aregiving the agent enough powers to carry out your financial affairs but limitany excess powers such as the power to give gifts.
You should never draft and sign a power of attorney document without advice from an experienced estate planning attorney. Contact Stouffer Legal at 443-470-3599 in the Greater Baltimore area for a consultation.