Choosing someone to make decisions for you under a durable power of attorney (POA) is a big step. This legal document allows a trusted person, called your agent, to handle your finances, property, or medical choices if you lose the ability to do so yourself. A power of attorney can be useful, but it also comes with risks. If you choose the wrong person, they might take advantage of your money or make decisions you disagree with.
Understanding POA Abuse
A durable power of attorney gives your agent broad authority. This means they are able to perform financial transactions, pay your bills, access bank accounts, and even sell property. All of this depends on what you specifically allow in the filings. If your agent is dishonest or careless, they could take advantage of their position. Common types of POA abuse include:
- Stealing Money or Property – The agent may use your funds for personal gain instead of your needs.
- Making Unauthorized Transactions – They may move money or sell assets without your approval.
- Ignoring Your Best Interests – An agent could fail to pay bills, neglect medical decisions, or refuse to follow the instructions you set.
Abuse is more likely when little oversight or an agent is given too much power without proper checks.
How to Reduce the Risk of POA Abuse
There are several ways to protect yourself when creating a durable power of attorney. These steps ensure that your agent follows your wishes and does not misuse their authority.
Choose Your Agent Carefully
The most important step is selecting the right person. Your agent should be honest, responsible, and have your best interests at heart. Many people choose a spouse, child, or close friend, but just because someone is family doesn’t mean they are the right choice.
Ask yourself:
- Does this person manage their own finances well?
- Do they respect my decisions and values?
- Are they willing and able to handle this responsibility?
If you have any concerns, consider naming a trusted advisor or a financial institution instead.
Set Clear Limits on Authority
A power of attorney doesn’t have to give someone full control over your decisions. You can limit what they can do and when their authority starts. A limited POA allows them to handle specific tasks, like managing one bank account. A springing POA only takes effect if a doctor confirms you can’t make decisions. Setting clear limits helps prevent misuse.
Require Transparency and Oversight
Requiring your agent to provide reports or share financial records with a third party adds an extra layer of protection. Consider these options:
- Co-Agents – Naming two people who must agree on decisions.
- Third-Party Monitoring – A trusted family member, attorney, or financial advisor reviews the agent’s actions.
This ensures that someone is keeping an eye on the agent’s choices, making abuse less likely.
Keep the Right to Revoke
If you are mentally able, you can cancel a power of attorney anytime. If you feel uncomfortable or notice abuse, revoke their authority. Write a statement canceling the POA, inform your agent and any banks or healthcare providers, and work with an attorney to make sure it’s legally valid.
Work With an Attorney to Draft the POA
A poorly written POA may lead to issues instead of providing the intended help. An attorney can review the document to improve clarity, confirm it meets legal requirements, and add important protections. They can also explain different types of POAs and guide you in selecting an option that fits your needs.
What to Do If You Suspect POA Abuse
If you or a loved one suspect a power of attorney is being misused, take action immediately. Signs of abuse include:
- Unexplained withdrawals or missing funds
- Bills not being paid when money should be available
- Sudden changes to financial accounts or property ownership
- An agent refusing to share financial records
Contact Our Team Today
Our team at BoyesLegal, APC is here to help. If you need to set up a POA with the right legal protections or suspect abuse, contact us today. Our San Jose estate planning lawyers can review your case, guide you through the next steps, and ensure your rights and assets are protected.