Legally Speaking by Cassandra Savoy, Esq. OP/ED
People often come to my office telling me, “I have Mom’s power of attorney so you can talk to me about…” I am usually suspicious because a Durable Power of Attorney provides the holder with extraordinary powers. Let the Giver of a Durable Power of Attorney BEWARE!
A power of attorney is a legal document that gives one person the authority to act on behalf of another. The most common purpose of a power of attorney is to handle legal and financial needs for someone else. Usually, elderly parents, or grandparents, give the authority for a son or daughter to act in their behalf.
Sometimes it’s a person who has become disabled. For example, the person suffers a stroke or a heart attack and loses mobility or the ability to speak or to write, or to see. There are advantages and disadvantages to giving someone a durable power of attorney.
On the one hand, giving someone a durable power of attorney is an inexpensive way to give some the ability to act on your behalf. However, here is a short list of the kinds of powers a Durable Power of Attorney gives your representative: Your representative can access your bank accounts. They can speak to the bank about your accounts. They can often write checks on your accounts to pay your bills. They can use your credit cards. They can sell the stock you worked so hard to purchase while you worked at Verizon.
If they are clever, they may be able to obtain a mortgage on the house it took you 30 years to pay off. They can purchase a car or rent an apartment using your credit. So, if you are thinking of giving a Durable Power of Attorney to someone, think carefully before you need it.
I represented an 80-year-old who had raised her granddaughter and her grandchildren had lived with her from the cradle to college. She had a stroke and during the crisis, she gave a durable power of attorney to her eldest granddaughter. Her granddaughter had a college education.
She trusted her granddaughter believing her to be honest and with high morals. The granddaughter had a job so my client had no idea that the granddaughter would use her money inappropriately. By the time my client regained her ability to pay attention to her finances, her savings account had been wiped out, she had $10,000 in credit card debt and her mortgage was eight payments in arrears placing her house in jeopardy of foreclosure.
It makes sense to anticipate that you MAY become disable or incapacitated at some point in your life and may need help and decide with a great deal of care who you should trust with everything that you have. The decision to give a Durable Power of Attorney should not be made during a recovery when your focus is on getting better and you are taking mind altering drugs. On the upside, the Durable Power of Attorney only lasts during your lifetime and for so long as you are disabled or incapacitated.
If you can imagine that one of your close relatives might, on the off-chance abuse your trust, you might want to consider a Limited Power of Attorney which restricts the authority of the representative to certain tasks. For example, you might grant the authority to pay only our current bills from the checking account, the account where your pension and social security are deposited. You might want to deny access to investment and savings accounts. You may want to name the purposes for which checks can be written. You might want to deny access to credit cards altogether or provide a limit.
Remember, if you grant only limited authority, and your disability persists, she can always petition the court to be your guardian. The guardianship process is a little tedious, but not so tedious that your representative should not go through it. The court will impose all kinds of restrictions on the use of your money.
Do you need to think about a power of attorney? Probably, yes. The key is to plan and not act under duress.
