A Power of Attorney (POA) is a legal document that grants someone the authority to act on your behalf in financial, legal, or other matters. While it can be an essential tool for managing affairs, there are common mistakes people make when setting up or using a POA. Here are the five biggest mistakes:
Not Understanding The Scope Of Authority
One of the most significant mistakes is not fully comprehending what powers are being granted. There are different types of POAs, such as limited or specific POAs that only give authority for particular tasks and general POAs that provide broader management. Understanding the extent of the powers granted before signing the document is crucial.
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Choosing The Wrong Agent Or Attorney-In-
Fact
The person you appoint as your agent or attorney-in-fact should be someone you trust implicitly. They should be competent, reliable, and capable of managing your affairs responsibly. Choosing the wrong person can lead to mismanagement, financial abuse, or other problems.
Failing To Update Or Revoke The POA
Circumstances change, and the person you initially appointed may no longer be the best choice. Life events like marriage, divorce, or the passing of the designated agent might necessitate a change. Additionally, if you regain capacity after a period of incapacity, you should revoke the POA to regain control of your affairs.
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Not Providing Clear Instructions Or
Limitations
If you have specific wishes or limitations on managing your affairs, it’s important to outline these in the POA document clearly. Vague or ambiguous language can lead to misunderstandings or disputes.
Not Consulting With Professionals
Creating a Power of Attorney is a legal process, and seeking advice from legal professionals is wise. They can help ensure that the document is drafted correctly, that your wishes are clearly stated, and that you understand the implications of granting someone else this authority.