During the estate planning process, you may want to create a power of attorney document. This type of document designates a representative to act on your behalf in legal and financial matters if you are ever unable to do so yourself.
When you give anyone authority over your finances, there is always the potential for abuse or fraud. Your agent may take actions that are detrimental to your interests. However, these steps will protect you from abuses of power of attorney.
Choose a trustworthy and objective agent
You should only give power of attorney to someone with integrity. This person may be a family member or friend with a proven track record of trustworthiness. Many people opt for a professional organization such as a trust or bank to handle their affairs.
Your representative must remain objective when making decisions for you. For this reason, you may not want to choose an adult child or other relative if you worry that emotion will cloud his or her judgment.
Your power of attorney agreement can mandate oversight by an impartial third party. This third party can step in if your agent takes inappropriate actions on your behalf.
Limit the agent’s control
In your power of attorney document, you should clearly define the scope of your agent’s authority. How limited or broad that control should be will vary according to your unique situation. A legal professional can help you determine the right power of attorney relationship for the needs of your estate.