When people face incapacitation in life it can be a real challenge. People have to learn to rely on others in order for their most basic needs to be met. This doesn’t just include people’s basic needs — like housing or food — but it also includes people’s financial affairs. Elderly people, in particular, may need help managing their finances if they begin to lose the ability to help themselves.
In order to do this legally many people create a power of attorney where they authorize another person to act on their behalf. This legal document can be narrowly or broadly constructed to serve the needs of the person.
However, when someone gives another person power over the person’s financial affairs there is always the risk of fraud. The person entrusted with the power of attorney could choose to abuse it.
There are some ways to help prevent abuse and fraud of a power of attorney. First, people must be careful that they choose the right person to have the authority. The person must be trusted and have the individual’s best interests at heart.
People can also contact their financial institutions to let them know the power of attorney is in place. They can also let them know of any limitations to the power of attorney.
Finally, people can freeze their credit reports. This ensures that no one can apply for credit under the person’s name. This could prevent opening new accounts or racking up debt in the person’s name.
There are many positives to creating a power of attorney. But, people also need to be aware of the risks. An attorney can help people understand their estate planning options and how a power of attorney can be used to benefit them.