by Erica M. Erickson, Attorney at Law
It is a sad and unfortunate reality that many seniors each year lose thousands of dollars or more in cash and other assets to the person, often a family member, who they trusted to be their financial power of attorney. To avoid this situation, it is important to understand what a power of attorney is. Generally, when you sign a power of attorney document you authorize another person (known as your “agent”) to act on your behalf, often with regard to financial transactions. The power of attorney document is very flexible and you have many options to customize the types of decisions you authorize your agent to make on your behalf, such as giving your agent the power to buy and sell real estate for you, allowing your agent to make gifts of your money and assets to others, and giving your agent the power to take and spend your money.
You also have the ability to decide when this power becomes effective. It can become effective immediately while you are still alive and able to make your own decisions; or you can make it effective only for a certain period of time, such as if you decide to take a two-week-long vacation to Europe; or you can decide to make it effective only in the event that you become incapacitated or unable to make your own decisions, such as if you end up in a coma or if you are diagnosed with a medical condition that renders you unable to make financial decisions for yourself.
Before you sign a power of attorney document you should carefully review the document to ensure that it becomes effective when you want it to, that it grants your agent only the powers you want that person to have, and most importantly, you should be sure to only grant a power of attorney to a person you fully trust to handle your money and assets in a responsible manner, with your best interests in mind.
Note: A health care power of attorney is a different document that relates to health care decisions and will be discussed in a future blog post.
This article was written by Erica M. Erickson, an Elder Law and Estate Planning Attorney at Strauss & Associates in Hendersonville, North Carolina. Erica can be reached at (828) 696-1811 or [email protected] and she is happy to answer any questions you may have or to provide you with a free consultation regarding your estate planning needs, including Medicaid planning, wills, trusts, and more.