shape
shape
shape
shape
shape
shape
7 October 2019 / Julie A. DiBaggio

Pros and Cons of Utilizing a Power of Attorney


A power of attorney (POA) is a legal designation of which allows someone (as an attorney-in-fact/agent) to act for and on behalf of another person (the principal). Upon signing with witnesses and a proper notary (in most states), a legal power of attorney document is created. The power can vary from narrow to broad, temporary to permanent, effective immediately, or for the future – regardless, there’s a lot to consider before signing a POA.

Review the following before executing a POA:

Three Key Advantages:
· Arguably, the biggest advantage of a POA is the convenience factor. A POA acts on your behalf to handle affairs without your presence. 
· A POA can help you when you no longer have the capacity to tend to your own matters – while physical incapacity does not qualify (i.e., being bed-ridden), mental limitations such as dementia do. Proper preparation, in this sense, prior to unfortunate turns in health, can alleviate stress on families and friends. 
· The flexibility of a POA, both in means of the power and the timeframe, make it a great option for some. It’s important to do your due diligence in your specific situation.

Three Key Disadvantages:
· One major downfall of a POA is the agent may act in ways or do things that the principal had not intended. 
· There is no direct oversight of the agent’s activities by anyone other than you, the principal. This can lend a hand to situations such as elder financial abuse and/or fraud. If you suspect a case of elder abuse fraud, be sure to follow these new requirements in reporting it.
· With the above-mentioned potential for abuse or fraud in mind, many third parties, such as a bank or other financial institution, may not accept a power of attorney. 

Considerations:
· If your POA is going to have great control over finances, the agent-principal relationship should be comprised of the utmost trust.
· A child is often not the best fiduciary, as it is difficult for a child to remain completely objective.
·If you do choose to appoint an agent, be sure they follow these tips to ensure they sign correctly. 

Related News

Alerts / 25 January 2021

2021 Consolidated Appropriations Act Places Limitations on Preference Demands

The Consolidated Appropriations Act of 2021 (CAA), recently signed into law on December 27, 2020, was primarily designed to extend several provisions of the CARES Act.
Read More
Alerts / 19 January 2021

Weltman Monitoring Congressional Proposal to Amend the Bankruptcy Code

On December 9th, Senator Elizabeth Warren (D-MA) introduced the first major consumer bankruptcy reform legislation before Congress since 2005. The Consumer Bankruptcy Reform Act of 2020 (CBRA), if passed, would fundamentally alter the bankruptcy system as we know it.
Read More
Alerts / 18 January 2021

FHFA Extends Some COVID-Related Loan Flexibilities, But Not Foreclosure Moratorium (Yet)

On January 14, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac will extend some loan origination flexibilities until February 28, 2021.
Read More

Join Our Email List

Get the latest articles and news delivered to your email inbox! 
Subscribe

Contact The Author

Julie A. DiBaggio

Attorney
Contact

Join Our Email List