So let’s start with the basics: What is a power of attorney? What does it mean for you, and what should you look out for? Being informed, prepared, and alert will help make a difficult situation as comfortable as possible for all involved.
Be Informed: What Is a Power of Attorney?
A power of attorney is a written document in which one person gives legal authority to another to make decisions about his or her money or property. If you’ve been named to manage money or property for someone else under a power of attorney, you are the fiduciary. It doesn’t matter if you’re managing a small amount of money or a lot, or if you’re a family member or not – you’re now legally responsible for managing that money or property for the benefit of that person, known as the principal.
If you were chosen as fiduciary, the principal sees you as a trustworthy, honest, and responsible person. Preparing yourself with the necessary information will help you manage your responsibilities and will bring you, and everyone involved, peace of mind.
Be Prepared: Understanding Your Legal Duties
While a power of attorney can seem like a complex document, there are really just four major duties you need to execute as fiduciary. Your legal responsibilities are to:
- Act only in the principal’s best interest.
- Manage money and property carefully.
- Keep your money and property separate from the principal’s.
- Keep good records.
Because you’re managing someone else’s money, your responsibility is to make decisions that are best for that person. This means managing the money carefully, using good judgment and common sense, and never mixing your assets with the other person’s. Keeping true and complete records is important; incorrect or incomplete records can get you in trouble — not just with the principal, but also with the police and with government agencies, such as a city’s or state’s Adult Protective Services office.
Be Alert: Protecting Your Loved Ones From Fraud
Financial exploitation has been called “the crime of the 21st century.” As a fiduciary, you should know the signs of financial exploitation. Recognizing what to look for will help you protect both yourself and your loved one. Be wary if:
- You or your loved one thinks that money or property is missing.
- Your loved one shows sudden changes in spending and saving behavior.
- Your loved one puts names on bank accounts and property that can’t be explained.
- Your loved one fears a relative, caregiver, or friend.
- A relative shows controlling behavior towards you or a loved one.
Even if your loved one controls only some (or none) of his or her funds, he or she can still be exploited. If he or she was exploited in the past, before you become involved, there still may be something you can do about it—you can, for example, alert banks and credit card companies or talk to an attorney about preventing future exploitation and recovering the property that was taken.
The truth is, we’re all at risk. Anyone with any money could be targeted by a fraudster at some point. But you can help protect your family and friends by recognizing how fraudsters operate and by reporting suspicious scams and suspicious sales pitches.
If you have a loved one at risk, contact our offices for assistance or a referral to the right source. Make sure you do not get sidetracked, sidelined or set up.
Also where you can get self help, where we got the information for this memo, is the U. S. government’s own website. Learn more right away. Check out the full Financial Self-Defense Kit from FinancialProtection.USA.gov to gather information and build the confidence you need to make smart decisions about your finances and those of the people you care about.
While an engaged lawyer is your best guardian, this kit includes resources that will help you avoid scams, be an informed fiduciary, and plan for your financial future.