“Generic power of attorney forms provide broad authority to the person you select as your agent. A lawyer will limit the powers to only those needed under the circumstances and will have fail-safes to reduce the odds of your agent embezzling your assets.”
You want to save a few bucks by using a pre-fab power of attorney (POA) form you bought online or at the office supply store. That option is less expensive than having a lawyer write your POA, but it could cost your or your loved ones everything you own. If it is a medical POA, it could cost you your very life. Here are four ways a DIY power of attorney can hurt you.
- The Person You Designate Could Take the Money You Meant for Your Children
When you name someone to serve as your agent, you are giving them the power to take legal actions on your behalf. The underlying assumption is that they will act in your best interests. However, some people unfortunately abuse the trust placed in them. Generic power of attorney forms delegates broad authority to the person you select as your agent. A lawyer will limit the powers to only those needed under the circumstances. They will also include fail-safes to reduce the odds of your agent embezzling your assets.
Let’s say Tom downloads and prints a DIY power of attorney before having high-risk surgery. He doesn’t want to trouble his adult children with serving as the agent, so he asks an old college buddy, Steve, to be the named agent. Tragically, Tom dies in the hospital. After dealing with the funeral and burial, Tom’s adult children turn their attention to settling his financial matters, only to discover that Steve emptied Tom’s accounts while he was in the hospital.
- With a Medical Power of Attorney, Your Life is in Their Hands
You can (theoretically) replace money, but you cannot replace your life. If you give the wrong person the power to refuse life support or other life-prolonging treatment, even if you need it only for a short time, for example, to reduce brain swelling for a few days, that is a mistake you cannot undo. Talk with a lawyer to make sure you only give your medical POA agent the authority you actually intend to.
- Choosing the Wrong Person as Your Agent
Be realistic when selecting someone to serve as your POA agent. Your lawyer can help walk you through this mental exercise. Many people will automatically choose, for example, their son as the agent, when their daughter might make better decisions. You also need not name your spouse as your POA agent. If someone else would be a better choice, you may select that person.
- If You Do Not Update, Your Former Spouse Can Swipe Everything
When you consult with your lawyer about your estate planning regularly, your documents, including your power of attorney, can stay current and up-to-date. What is the worst that could happen with the DIY power of attorney documents you and your ex-spouse wrote years ago, naming each other as agents? Your ex would never clean out your bank accounts, investments or other assets with a document giving him or her the authority to do so, would they?
Talk with a local estate planning lawyer, because the laws in your state might differ from the general law discussed in this posting.
U.S. News & World Report. “The Dangers of DIY Estate Planning.” (accessed January 21, 2018) https://money.usnews.com/money/personal-finance/articles/2010/06/29/the-dangers-of-diy-estate-planning
CNBC. “The 5 biggest estate-planning blunders.” (accessed January 21, 2018) https://www.cnbc.com/2014/04/13/top-estate-mistakes-140414-schwartz-ec.html