Power of Attorney
What Is A Power of Attorney?
A Power of Attorney is used to delegate legal authority to another person. The principal (or the person granting the authority) gives the agent (or the one receiving the authority) the power to make legal decisions on the principal’s behalf. These decisions may involve things such as: handling bank accounts, selling real estate, and managing other assets.
It is a powerful legal tool used to manage and protect assets. It can be used when the person granting the authority has become incapacitated or just traveling away from home.
Are There Different Types Of Power of Attorney?
A Power of Attorney can be short and simple or very extensive. Some are limited to simple banking and real estate transactions. Others include broad powers to transact all kinds of business.
Powers of Attorney used for transactions related to eligibility for Veterans pension benefits or Medicaid benefits, for example, must contain express authority for those transactions to be effective.
A careful lawyer drafts a power of attorney to fit the client's needs.
When Does a Power of Attorney Expire?
In Oregon, all Powers of Attorney are "durable," meaning that, unless the document says otherwise, the authority granted continues in effect even after the person granting the authority becomes incapacitated. The Power of Attorney expires when the person granting the authority dies.
How Can a Power of Attorney Be Abused?
The potential for fraud exists in every Power of Attorney arrangement. Through self-dealing, embezzlement, theft, or unlawful gifting, a Power of Attorney agent may significantly deplete an estate. Other ways of financial exploitation include changing beneficiary designations on life insurance or annuities, and opening bank accounts with joint title or pay on death provisions in favor of the agent.
Because of the potential risks, you should consult with an experienced attorney before signing any power of attorney documents.
Can a Power of Attorney Be Challenged?
If the person granting the authority doesn't understand what they are signing, the creation of a power of attorney may not be valid.
If a validly granted power of attorney has been abused by the agent, grounds may exist to sue the agent for the return of embezzled property or for monetary damages. The guilty agent may also be charged with a crime. The person granting the authority may sue or, if he/she is deceased, the intended beneficiaries may be able to sue the agent for breach of fiduciary duty, interference with estate planning, or a number of other causes of action.
Can I “Fire” My Power of Attorney Agent?
You can change your mind about who acts as your agent at any time. If you are not happy with the way your agent is managing your finances, you can revoke the power of attorney by giving your old agent notice in writing that his/her authority is revoked. You can then appoint a new agent you trust.
A Word of Advice
A Power of Attorney is like a sharp scalpel - one of the most important tools in our legal "black bag." It can preserve and protect from harm, but in the wrong hands, it can make a big mess. It is wise to have an experienced Estate Planning and Elder Law Attorney help you create your Power of Attorney and advise you how to safely use it.