Durable Power of Attorney for Finances
Why You Need a Durable Power of Attorney
One of the most prolific issues concerning vulnerable adults is financial abuse or exploitation, defined as taking financial advantage of a disabled or elderly victim to the detriment of the victim. One of the most successful measures taken to help prevent this type of exploitation is family involvement in their loved one’s finances via a durable financial power of attorney.
A person may not perform legal tasks for an incapacitated adult without legal authority. The authority may be granted by a court, such as when an elder is incapacitated and a guardian is appointed, or the power may be granted privately through execution of a document called a power of attorney for finances.
What You Need to Know
The power of attorney document must have been executed prior to the incapacity of the “principal.” The person giving the power is called the “principal” and the person receiving the power is the “agent” or “attorney-in-fact.” A properly drafted power of attorney may preclude the need for your action, saving substantial legal expense and the invasion of privacy in the event of incapacity.
The power granted in a power of attorney may be “durable”, which means it survives the incapacity of the principal. If the grant is not durable, the power is suspended until the principal regains capacity and during this time the agent may take no action.
Despite broad and sweeping language in many powers of attorney, most states do no require third persons to honor the power. For example, problems may arise with real estate transactions, tax returns or government bonds. Powers of Attorney are more likely to be honored if they specifically refer to certain assets or types of transactions. The authority of the agent is limited to those items listed in the power of attorney.
A power of attorney imposes a duty of ethical representation of the principal by the agent. Other than receiving a fee, the agent is not permitted to benefit personally from the power of attorney, unless that power is specifically included in the document. The agent under the power of attorney is accountable to the principal. The agent may be called upon to fully account for all actions taken on behalf of the principal. If the principal is incapacitated, the agent may be required to account to a court, either in a guardianship proceeding or a criminal court. If the agent abused the powers granted in the power of attorney document, the agent may be subject to criminal prosecution under elder abuse statutes.
How Malm & La Fave, S.C. Can Help
While forms for powers of attorney are widely available, an elder law attorney should be consulted prior to executing documents that give access to one’s financial affairs to another person. The Wisconsin statutes do provide a sample form for use, however, the sufficiency of power of attorney forms for a clients’ specific needs is usually tested only after it is too late to make necessary revisions.
Malm & LaFave, S.C. is here to advise its clients on how to protect the rights and welfare of any principal who wishes to sign a financial power of attorney. Further, Malm & LaFave, S.C. has particular experience in drafting and enforcing powers of attorney. The agent under a power of attorney may also need legal advice or representation. Sometimes, interpretation or enforcement of a power of attorney (or recovery against an agent who has acted improperly) may require court proceedings and representation by an experienced elder law attorney. Malm & LaFave, S.C. has such experienced elder law attorneys to assist you in this area of law.