Detering Exploitation of a Power of Attorney
by David Goldfarb
A power of attorney is an essential part of any comprehensive estate plan. Many people understand the general purpose of a power of attorney and the benefits of drafting this document. However, people may not realize the potential for exploitation of a power of attorney and the steps to take to deter such exploitation.
A person designated as power of attorney may take advantage of the agency to misuse and misappropriate assets and property of the principal. To prevent such exploitation, you should always seek assistance from a skilled elder law attorney when drafting your power of attorney. We take the following steps to protect you and your estate.
Carefully Select Your Agent
Perhaps the most important consideration is who to designate as your power of attorney. You want the following attributes in an agent:
- Trustworthy
- Reliable and responsible
- Able to make decisions that reflect your goals
Never make a snap decision, and never feel pressure to simply choose your oldest child or another close relative, as they may not prove the best and most reliable choice. Discuss the pros and cons of your choice carefully with your attorney.
Consider Third-Party Monitor
Many people choose to enlist a third party they trust to oversee and monitor all financial moves and decisions. This increases the transparency of the agent’s actions. Too often, there is no one who pays attention to an agent’s conduct and decisions until it is too late and they already exploited their position.
Limit the Authority of the Agent.
You do not always have to give your agent full authority to control all of your assets in any way they want. For example, you can limit their authority to:
- Change beneficiaries on insurance policies or retirement accounts
- Add rights of survivorship
- Enter into certain contracts
- Alter trust documents or beneficiaries
- Gifting abilities
You can also authorize limited or conditional authority, such as the ability to change a beneficiary when needed for a specific purpose, such as a Medicaid application. Limiting authority can help prevent exploitation in many situations.
Third Party Power to Revoke
When you are incapacitated, you will not have the ability to know when to revoke a power of attorney due to exploitation. You can give a third party the power to revoke an agency if they believe the agent is engaging in exploitation, neglect, or abuse of your affairs. Giving someone this power in the document makes it significantly easier for others to revoke the agency than if they must take the matter to court.
Contact a New York Elder Law Attorney Today
Power of attorney documents are more complex than you may think, and an elder law lawyer can help you take steps to prevent exploitation of your estate. The law firm of Goldfarb Abrandt & Salzman LLP helps clients in New York draft and maintain estate planning documents of all types. Please call (212) 387-8400 or contact us online for a consultation about your estate planning needs.
