Perhaps one of the most misunderstood elements of an estate plan is the power of attorney designation. Unfortunately, because so many do not understand how it works or they fear losing control of their estate, they omit this important document from their estate plans.
While it is true that the media often shares sensational stories of power of attorney agents who take advantage of their principals, there are some wise steps you can take to improve the chances that your agent will have your best interests in mind.
The general role of a power of attorney is to take over your financial and legal decisions if you are unable to do so because of a medical condition, travel outside the country or other reasons. Your agent can pay your bills, handle your investments, deposit cheques and take care of your property. You may also assign power of attorney duties to someone who will make medical decisions for you if you are unable to do so.
Some ways to prevent your agent from taking advantage of your vulnerability at this time include:
- Naming several people to share the duties
- Discussing your plans and desires with those you are considering for the role
- Meeting with your power of attorney and your legal advisor to clarify your expectations
- Creating a power of attorney document that describes your wishes and the limitations on your agents in as much detail as possible
Your estate plan may include a separate letter of instruction that addresses as many contingencies as you can think of. For example, outline your desires if you should need long-term care, as well as the questions your agent should consider before making any decision. For matters as delicate and complex as a power of attorney, it is seldom a wise idea to use an online or do-it-yourself template without consulting a skilled legal professional.