Appointing the right people under a power of attorney

| Mar 19, 2020 | Estate Planning |

Some people in Texas might have heard that a power of attorney can be a useful tool as part of an estate plan. This is true, but it also a powerful tool, and this means that it should be created with care.

A power of attorney can give another individual power over a person’s finances. That power may or may not be limited, and it can start in the event that a person becomes incapacitated or as soon as it is created. People should be careful about who they choose to have power of attorney. A number of well-off professional athletes, including basketball player Dennis Rodman, were taken in by a woman who claimed to be a professional financial adviser. She is now serving a prison term after conning her clients out of millions of dollars.

One way to avoid an error like this is by having the agent bonded. This involves a third party that guarantees that a person will be reimbursed if there is a problem. This would have prevented the situation with the athletes since there would have been a background check on the woman. Another option is to appoint more than one person. the appointment has been made, the principal should continue monitoring their financial records to ensure they are not being misused.

Estate planning can be a complex process, and an attorney may be able to help a person understand other responsibilities and roles and who they might choose for them. For example, a will can be used to appoint an executor for the estate as well as guardians for the children. An executor should be someone who is organized and trustworthy, but the person is not required to have financial and legal expertise and may hire professionals, including an attorney, if necessary.