Anticipate Incapacity

21 May Anticipate Incapacity

Select your Power of Attorney with Care

A Power of Attorney [PoA] is a powerful document. It puts the rights of ownership into the hands of another.  A PoA gives some, or all, of the decision-making power of the grantor to another. PoA financial exploitation is considered a serious problem—it often involves family members. Property of all sorts that has been carefully accumulated over a lifetime of saving can be irretrievably lost.

When the POA takes effect, the attorney can do anything the owner can do regarding the assets where s/he is empowered. Blatant abuse of the grantor’s finances can happen by an unqualified or exploitative attorney. In a worst-case scenario, the attorney:

• May abuse his authority.
  • May mismanage financial assets with a resultant decline in value.

Fraudulent activity by the PoA may include:

• Emptying the grantor’s bank account and using the money for personal use, not for the grantor.
• Theft of grantor’s pension cheques or possessions.
• Making unauthorized, questionable, or speculative investment decisions.
• Abuse of finances, which may contribute to unnecessary expenses, or damages from inaction.
• Misappropriation of the grantor’s assets.
• Mortgaging or selling a grantor’s home, or other asset without the grantor’s knowledge/consent.

There are some limitations on the power of the attorney.

A person acting with Power of Attorney cannot:

• Make, change, or revoke the grantor’s will.
• Make, change, or revoke a codicil to the grantor’s will.
• Make, change, or revoke a beneficiary designation in a life insurance policy.
• Profit secretly from his position.
• Assign or delegate his authority or decision making to another person unless specifically permitted by the POA.
• Have any conflicts of interest with the grantor.
• It also appears that an attorney may not make an RRSP beneficiary or pension plan beneficiary designation on behalf of the grantor.

In our next article we will provide some suggestions to prevent abuse and still be able to use a PoA.

Joel Rose

With over 35 years of experience, Joel Rose helps families – and their businesses – to prepare for the future. He offers guidance and support to help his clients create estate plans and succession plans that meet the needs of the whole family. Through his extensive professional and personal experience, Joel is known for his compassion and his ability to find a creative solution to meet each family’s needs.