A (PoA) Power of attorney is incredibly powerful as a legal document; however, it’s overlooked by people as they focus their energies in making wills and trusts. More often than not, they name a person as the agent with a power of attorney hurriedly and by the last minute. Choosing a power of attorney agent is a decision that’s to not to be taken lightly. In this article, we’ll discuss everything there is to know about getting a power of attorney and making sure it is considered valid.
Understanding the Power
In a POA, another person is named as the attorney-in-fact or the agent and that person will be the one in making carrying out your decisions. The power will give the agent control over assets that are held in the name of grantor of authority, called as the principal. If bank accounts are in your name, then your agent will gain access to the account. If you’ve transferred assets to a trust, the trustee has control over the assets.
Considering the Options
There are two primary kinds of POA. The durable POA is effective when it’s signed and will survive the incapacity of the principal. As for the springing POA, it springs into effect as soon as you’re incapacitated. The springing POA is the more attractive option to people; however, it’s much more difficult to utilize. The reason for this is because the agent will have to convince financial institutions that the principal is incapacitated. Even though the power of attorney spells exactly the way in doing that, the local bank may not want to make the determination. This is when a lawyer is needed. Most attorneys advise clients to utilize a durable POA instead of the springing type. Lawyers in Dubai often hold original copies of POAs until they’re needed in order to give principal extra protection.
Assigning Powers Carefully
People often ask if agents are able to steal money from the principals. The unfortunate answer would be a yes. Because the agent of a principal has access to financial accounts, funds may be withdrawn and used for the benefit of the agent. The agent has fiduciary duty in using assets only for the benefit of the principal or as what’s directed in the document. If an agent misuses a power of attorney, it can be sued for stealing or misusing funds. If the agent, however, spend all the money of the principal and there is no more money left, there is a chance that the principal won’t recover anything.
Common Abuses of POAs
Depending on what the POA uses as the language, the agent may realize the ability to change bank accounts ownership or changing the beneficiary designations. All these are common scenarios for second marriages. Transfers often occur prior to when spouses pass away. This is common when the husbands are dying and confined in a hospital. If the will of a husband leaves massive amounts of money in bank accounts to children from the first marriage, it is likely for a second wife to act under the POA to add herself as the joint owner of assets of the husband. As soon as the husband dies, an abuse by the second spouse may be carried out as she is the surviving joint owner. The second spouse may liquidate the accounts that were supposed to be accessed by the children.
Naming Two Agents in a PoA
Consider naming two attorneys-in-fact or agents that will act together on your behalf. Although having two people serving your needs can be cumbersome, it’s been proven that it’s definitely worth the effort as having an additional pair of eyes when it comes to the usage of the POA avoids abuse. Having two agents substantially reduces the risk of PoA abuse and help ensure that assets go to those who are designated by the principal.
Naming an Alternate
If the named agent dies prior to the incapacitation of the principal, there has to be a backup in order to carry out your decisions for you. In addition, it is best to consider a conservator or guardian in a POA just in case it is needed.
Reading the Document
This can seem obvious; however, there are those that don’t read important legal documents. It is essential for you to review powers that are listed in your power of attorney. If you want your agent to have the ability to amend a trust that’s revocable which you’ve created, then you need to make sure that it is spelled out in the document. Generally, lawyers advise against. However, you should discuss your specific situation and needs with your lawyer.
Are you considering creating a power of attorney in Dubai? Consult with a lawyer as they can help ensure the document is properly drafted and enforceable.