WFG News

Why We Hate Powers of Attorney – Part 1 of a 4 part series

By October 30, 2017 No Comments

A Power of Attorney (“POA”) is simply a document in which an individual (the “Principal”) appoints someone else to act on his behalf. We call that person either an “Attorney-in-Fact” or an “Agent.” The POA can be a powerful tool to assist in managing the affairs of aging family members, those who travel frequently or who are just unavailable to come into the office (including those in the service of our country overseas). To address other needs, in many states, one can create a “durable” power of attorney where the authority to act continues even after the Principal is no longer competent to do so themselves.

Even though a POA can be convenient for our customers, the use of POAs is a regular source of very expensive claims, elder abuse, and theft (two things you never want to be accused of facilitating). A POA has an unusual potential for mischief and fraud. Because we are not dealing with the Principals directly, we don’t get to check their ID; we don’t have a good way to verify that the signature on the POA is not a forgery, or that the Principals were competent and not under duress. Having broad power over someone else’s assets can prove an irresistible temptation, and we can’t always ask the Principal if they understand and approve of the transaction.

As is often the case, the Principal may be in their senior years with possible diminished physical or mental capacities. The title claims may be raised by children (usually not the one acting under the POA) long after the parents are available to explain their actions and desires.

Click HERE to download and read the full article.