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The unfortunate fact is that you can never be sure, and this is the major difficulty of appointing someone to act on your behalf with power of attorney. The technical term for this is appointing an 'agent' or 'attorney-in-fact'. Power of attorney is an all or nothing situation, you cannot authorize some things and not others, and there is no absolute way of being sure your best interests are being served.
By granting power of attorney, you are giving someone permission to act as you entirely. Everything that you can say, do, sign or authorize; they now can. This is what makes it so extremely risky. Some people try and avoid this by squirreling money away in an offshore account that they keep only very private records of, and never make their attorney-in-fact aware of these assets. This is an extreme course of action and one that is likely to fail; someone with power of attorney can request any financial information held on you, including your tax details. Money is inevitably located.
Although the major difficulty with power of attorney is the worry over being stolen from, there are other things to consider before agreeing to appoint an attorney-in-fact. Your agent will be able to make decisions for you; and this includes giving gifts, buying and selling stocks and assets and other forms of investment. Your agent, with the best will in the world, could make a poor business decision and invest in a bad company, and as a result you lose large amounts of money. They could even technically bankrupt you.
It therefore becomes essential that you chose not only someone you can trust, but someone with a little sense. If possible, try and pick someone like-minded, who you genuinely believe will act as you will in any given situation. If you do have stocks and investments, ensure your agent has regular meetings with financial experts that you trust and have experience with. They can't stop all bad decisions, but an experienced broker or trader can probably prevent the worst from happening.
Another issue that may be worth considering is that your agent can actually vote on your behalf. If you are strongly politically minded, remember that they may be able to vote for a party or issue that you staunchly disagree with – and in your name. If you fear this may be an issue, consider choosing someone of a similar political affiliation or, better yet, someone apolitical.
Sadly, all you can do is minimize the risks; absolute prevention is impossible. Make the best decision regarding who you choose for your agent, and then inform your friends and family. If they suspect that the agent is acting incorrectly, illegally or against your wishes, they can apply to a lawyer for the power of attorney to be revoked. They will need to have some proof of why they believe this; but often, mere investigation will stop most agents acting incorrectly.
Remember, the vast majority of agents act absolutely as you would wish, and have only your best interests at heart. But the saying is true; you can never be too careful, so take all the precautions you can.
Disclaimer: This article is for informational and entertainment purposes only, and should not be construed as legal advice on any subject matter.
At present, many people have not planned for their potential incompetence. There are number of legal devices that are readily available to assist people in expressing their wishes in advance. Two of these devices include a Durable Power of Attorney for Financial Decisions (General Durable Power of Attorney), and Durable Power of Attorney for Health Care Decisions. A senior citizen may become permanently disabled due to a stroke, or a young adult might be rendered temporarily unconscious as a result of an automobile accident. In both of these scenarios, the trauma thrust upon everyone involved can be overwhelming, especially when interested parties disagree about how to handle the crisis. As with most things in life, planning ahead can help.
The two devices, Durable Power of Attorney for Financial Decisions and Durable Power of Attorney for Health Care Decisions, will be discussed separately.
A durable power of attorney, is a form of agency. The person who gives the power is the principal, and the person who receives the power is the "attorney-in-fact" or agent. "Durable" in this context means that the agent's power will survive the principal's incapacity or disability. As a resultDurable Power of Attorney's, can be used as an alternative to guardianship in some states under certain circumstances, provided the principal executed the document before losing capacity.
As a general rule, a General power of attorney is also referred to as a Durable Power of Attorney for Financial Decisions, or simply a Durable Power of Attorney. A Durable Power of Attorney for Health Care Decisions is also a Durable Power of Attorney, but its authority is limited to health care decisions. In Kansas, both powers can be contained in the same document. Because these two documents convey such divergent authority to one person, many seniors choose a different person for each of these powers. The agent's authority to act for the principal under a Durable Power of Attorney is based on the powers that the principal gives to her. Whether broad, general powers or limited, specific powers are given to the agent is completely determined by the principal. Among other things, the principal may delegate to the agent in the Durable Power of Attorney the authority to make deposits and withdrawals from his checking account, to file his tax returns, and to sell his home. There are a few powers, however, that the principal may not delegate. For example, the agent cannot prepare a will, vote, or seek a divorce on the principal's behalf. In Kansas, the principal may grant a gifting" power to her agent, but this power generally must be stated with specificity within in "the Durable Power of Attorney.
Two primary methods exist to determine the effective date of an agent's power under a Durable Power of Attorney. First, a Durable Power of Attorney may confer power to an agent at the time the documents are executed and delivered. A second method reserves the agent's power until the principal has become incapacitated or disabled. Upon the occurrence of either of these events, the power springs into effect. This type of Durable Power of Attorney is labeled "springing." Kansas law provides for both types in the Uniform Durable Power of Attorney Act. Senior citizens' needs vary; therefore, no solution is best for all people. Many considerations will need to be evaluated in order to determine how the senior's needs are best meet.
A durable power of attorney is revocable by the principal while he still has capacity. If the agent has a financial interest in the subject matter of the power of attorney, the power is generally irrevocable. Most senior citizens who execute Durable Power of Attorney's are getting assistance with their day to day personal affairs and their agents do not have an ownership interest in the senior's property which would preclude revocation. In addition, revocation can be by implication, in addition to, destruction of the document or express revocation by the principal.
Other modes of termination include: death of the principal or agent, occurrence of a specific event, qualification of a guardian, or the passage of a date of expiration. Generally, after the death of the principal, the agent of a Durable Power of Attorney may bind the principal using a Durable Power of Attorney only if she does not know of the occurrence of this event.
The agent binds the principal in accordance with the laws of agency. As a result, the principal is personally liable for contracts made by the agent on the principal's behalf. The agent should follow the direction of the principal while the principal remains competent. The agent has a duty to act solely for the benefit of the principal, and if she does not, she is subjected to liability for her breach. Although this general principal is true, often the agent may not have any assets for which she may be held accountable. As a result, senior citizens are often advised to select a trustworthy person to be their agent. If the principal's competency is in question, the agent may need to seek determination of a court prior to acting against the wishes of the principal, or she may be liable to the principal for breach of her fiduciary duty.
Kansas law does provide for the recording of any instrument which affects real estate. Recording, however, is not currently required by Kansas law. If the original Durable Power of Attorney was recorded, however, any subsequent revocation should be recorded. Some states do required recording of a Durable Power of Attorney that will affect real estate.
The Kansas statutes provide for a Durable Power of Attorney for Health Care Decisions. The same basic concepts explained above for Durable Power of Attorney apply to the Durable Power of Attorney for Health Care Decisions with regard to agency law, effectiveness, revocation, and termination.
The key difference between the Durable Power of Attorney and the Durable Power of Attorney for Health Care Decisions is the authority granted. The Durable Power of Attorney for Health Care Decisions specifically grants authority to the agent to make decisions about and relating to medical treatment. For example, the agent make consent to treatment, refuse to consent to treatment, or withdraw consent to treatment. In addition to these decisions directly about medical treatment, the agent may make all arrangements at any hospital or nursing care facility, employ or discharge care personnel, request, receive, and review any information about the personal affairs or physical or mental health of the principal.
As a contingency, it is recommended that the principal select a successor to his agent. The successor attorney-in-fact may be designated in the same document as the primary attorney-in-fact. If this does occur, the Durable Power of Attorney will continue, beyond the life of the primary attorney-in-fact, provided the successor is living and competent.
A complete discussion of statutory formalities, drafting, and various tax liability is beyond the scope of this summary. It should be noted however, that most states restrict who may be a witness to a Durable Power of Attorney or Durable Power of Attorney for Health Care Decisions, and some restrict who may be an Health care agent.
This overview of the law is for referenceand education only, and is no replacement for competent legal counsel.