A power of attorney is an instrument in which you designate another person to act on your behalf. A financial power of attorney is “durable” in the sense that it survives incapacity. If you become unable to manage your own financial affairs, your agent can use the power of attorney to pay your bills, manage investments, and prevent the waste of your assets.
A power of attorney can be a useful tool to ensure continuity in your affairs if you are unable to tend to them yourself. The instrument is not subject to court approval or rejection and can only be challenged under limited circumstances. It allows another person to step in and make decisions about your financial affairs.
However, a power of attorney involves a high degree of trust between you and your agent. You must ensure that the person acting on your behalf knows your wishes and is ready to carry them out. You must also be certain that the agent will not abuse the position, since he or she will have control over your property and assets.
Financial exploitation can be subtle. Family members may ask a cognitively-impaired person for repeated loans they never intend to repay. Others will write themselves checks, expecting that the senior won’t notice or won’t remember. Some may justify a gift of money to themselves because they are looking after the senior and feel that they deserve something in return. A trusted agent can abuse a power of attorney to drain a bank account.
Elder financial abuse can be financially and emotionally devastating. Incidents are on the rise because of a slow economy and an aging population. You can take some basic steps to protect yourself, your assets, and your loved ones.
Be suspicious if an elderly person becomes socially isolated, has a new “best friend” or companion, is unavailable to come to the phone or is hesitant to have contact others unless the caregiver is present.
Be alert to missing property, large or unexplained withdrawals from bank accounts, reimbursements or gifts to caregivers, unfamiliar signatures on checks and changes in spending patterns.
Preventing financial exploitation often requires taking legal precautions. Your agent can act on your behalf and can do anything with your money, even without your knowledge. Consider carefully to whom you give financial power of attorney and make sure that it is drafted by a competent attorney.
Information provided by Ross Barnett, attorney for Abendroth and Russell Law Firm, 2560 73rd St., Urbandale, 278-0623, www.ARPCLaw.com.