Estate Planning

Power of Attorney Abuse on Rise

By David M. Goldman

The Wall Street Journal online has an article on How to Ensure Relatives Don't Rip You Off. Also the Toronto Estate Law Blog has an article today on POA abuse.

The article mentions several things that can be done to safeguard clients.
1) a provision requiring regular accounting statements from the agents.
2) Naming co-agents who can serve as checks on each other.
3) naming a supervisor who has the power to fire an agent

When setting up a Power of Attorney, you want to name an agent while you're still in good health and can make clear decisions. Typically, such documents are included as part of a standard Florida estate-planning package, which also includes a Florida Will and health-care proxy giving an agent the power to make health decisions when you can't.

Powers of Attorney are often a tough balancing act: You want them to be simple for trusted family members or friends to implement, without too many hoops each time a transaction is made. But you also want to avoid giving agents a license to steal.

To further protect yourself, you can require that your agent provide family members, or a third party, such as a lawyer or accountant, with regular accounting statements. Another strategy is to name co-agents. While that can be a burden -- many transactions, for instance, would need two signatures -- it can also create a system of checks and balances. In some cases, lawyers appoint an additional safeguard: a "protector," who has the power to replace the agent if there is wrongdoing.

Another key point: Make sure to carefully lay out exactly what powers you want your agent to have. For instance, you can limit the agent's power to make gifts of your property, so they can't just give money to themselves. Spell out under what conditions gifts can be made, how much and to whom.

Full post as published by Florida Estate Planning Lawyer Blog on April 17, 2008 (boomark / email).