By Cosmic Press — Branded Content

Discussing sensitive topics with parents or grandparents can be stressful for the family. However, it is in everyone’s best interest to address these concerns before they become urgent and sound decision making is compromised.

A power of attorney can make life a lot easier when dealing with legal situations if you cannot be physically present. However, just like any legal document it can be open to abuse which can lead to larger problems down the road.

There are a number of things to bear in mind when preparing a power of attorney, especially when it comes to limiting the possibility of abuse. The document allows you, the ‘principal’, to appoint an ‘agent’ to act on your behalf and take care of financial affairs.

However, there have been instances when the ‘agent’ used power of attorney to exploit the ‘principal’, more often seniors. There are two types of document, a regular power of attorney and a ‘Durable’ power of attorney, and it is important to know the difference.

The agent loses their authority when the principal becomes incapacitated under the regular version whereas a durable power of attorney is not revoked when the principal cannot act.

This second option is often used by the elderly for estate management purposes if the individual can no longer make decisions. A third option called a ‘Springing Durable’ power of attorney comes into effect at a later date in time, usually after a specific event.

There are a number of steps to follow in order to prevent abuse of any of the options above. If the person granted as the agent has their own selfish interest they make elect to execute the power of attorney for their own benefit regardless of its genuine intentions.

Therefore, the most important thing to do when considering a power of attorney is appointing a trustworthy agent. A person with your best interests in mind and not their own should be used. If one cannot be found an alternative is to appoint a professional fiduciary which can be a bank with trust powers, a certified public accountant, or a trust company. However, there are likely to be additional fees and expenses attached to this professional option.

Having more than one agent is also a good idea. Co-agents can work together and share responsibilities, however it could be cumbersome if both agents have to sign every document. An alternative to this is to have a second agent just for the signing of large transactions.

A backup agent is also a good idea in case the primary agent becomes incapacitated or no longer wants the responsibility. This can all be specified in the power of attorney document you execute.

To prevent exploitation of finances you can add a clause that requires the agent to provide accounting records to a third party. This does not have to be a registered accountant but can be a member of family or friend you trust. Limitation of powers can also be included in the document to prevent over exposure to potential abuse.

If the unfortunate situation arises that the power of attorney has been abused the best course of action would be to consult a lawyer and inform the authorities as it could be considered a criminal act.