The risks of being an agent can vary mainly by the kind of power of attorney UAE made, as well as the terms that are agreed upon when the agreement was signed. It is, therefore, worth going through the most common kinds of POA in UAE. In the country, the following are the most common: general durable POA, limited durable POA, and medical or healthcare POA. Here is a quick rundown on what they mean as well as the risks which are associated with each kind.
- General durable POA – this is the standard power of attorney for estates, finances, and wills. An agent is able to buy and sell real estate, conduct financial business, and pay bills for the grantor of the authority using a power of attorney. The word durable in relation to the power of attorney UAE documents means the agreement remains binding even when the grantor passes away or becomes incapacitated. This kind of POA carries the most risk but only for the grantor. There are only a few liabilities and restrictions for the authority of agents, or persons given authority by grantors, that are beyond the local fraud and finance legislation.
- Limited durable POA – this agreement, outlines the agent’s limited powers as chosen by the grantor. The POA is becoming more common because of the number of theft and fraud cases in the country that are committed by agents using general durable PPOAs. The stipulations of the POA can vary by individual; however, well-written limited durable POA agreements contain clear requirements that agents must follow. Limited durable POAs incur the most risk for agents. Grantors can create very specific rules regarding how their personal affairs can be handled. The personal liability of an agent has often required should the individual violate the stipulated rules and restrictions. This is why it is important for an agent to read the agreement before signing.
- Medical or healthcare POA – this is a simple and limited POA that allows an agent in making medical decisions on behalf of a grantor should he or he become incapacitated and requires assistance and guardianship. It is important to remember that this specific kind of agreement carries a very low risk for an agent. No agent is going to be held responsible of the grantor’s medical bills financially. In most cases, a medical POA will have several different successor agents that are listed in case one agent is unable and unwilling in fulfilling his or her duties and responsibilities stated in the POA.
Regardless of the kind of power of attorney that binds an agent, there are important risks that need to be considered when signing on as a grantor’s agent in a power of attorney in UAE. They are as follows:
Being liable personally for financial choices and other decisions
While almost all general durable POAs can protect an agent from general financial and legal liability, it is possible to be inadvertently making one’s self liable with certain decisions and transactions even when acting on behalf of a grantor.
For instance, there’s a couple of documented cases wherein a relative was named as the agent for an elderly and sickly family member. An agent needed access to the mortgage account of the grantor in order for bills to be paid before the deadline. The bank that holds the mortgage said the power of attorney UAE needs to have a cosign on the mortgage of the father before access is permitted for the account. Had the agent agreed to cosign the mortgage rather than consult a family lawyer in UAE, the agent would’ve been stuck consigned onto the mortgage up until the end of the term.
The bank would’ve been within rights to seek compensation from the POA agent should the grantor’s mortgage become the default. The bottom line is if anyone asks to sign extra paperwork or guarantees as to the agent, you need to consult with a lawyer prior to signing. You can set yourself up for financial trouble just by being an agent to a power of attorney.
Becoming liable due to a personal relationship with a grantor
Spouses are considered as the next of kin. As such, it’s generally unwise if a spouse is given POA over personal affairs as this can affect him or her adversely should he or she needs to utilize the POA. What is recommended if you really want to make a spouse or family member the agent of a power of attorney UAE is to create a limited durable POA instead of a general one.
Giving unlimited access to your legal, credit, and financial affairs to anyone who is not an attorney is unwise or even catastrophic. The best option would be to avoid liability and create a limited POA. If possible, consider making a trust for all property and assets rather than giving family members a POA.
For more information regarding the power of attorney in UAE and its notarization in UAE, call us here in Notary Public Dubai!