The Dangers Of Power Of Attorneys
Columbus Blue Jackets defenseman Jack Johnson granted power of attorney to his mother, Tina Johnson, giving her full control of his finances. Within a short period, Jack Johnson was forced to file for Chapter 11 bankruptcy and claims that his parents are responsible for helping to lead him “financially astray.”
What Is A Power Of Attorney?
A Power of Attorney is a written legal document in which you (the principal) appoint another person or institution (the attorney-in-fact or agent) to make property, financial, and other legal decisions for you. Once signed, your Power of Attorney remains in effect until you die or revoke it in writing. If you become physically or mentally disabled, your agent can continue to handle your money for you.
The Two Types Of Powers Of Attorney
- Limited Power of Attorney: handle a specific transaction, like a house closing; only for a specific purpose
- Durable Power of Attorney: is necessary to have someone act in a wide variety of situations for a period of time until you revoke the power or pass away
Dangers of a Power of Attorney
These documents grant very broad powers to the agent, and these powers can be misused by the agent. These powers are given to benefit you (the principal) not the agent. Great care should be used in selecting a person to be your agent. There is no person or government official to monitor Powers of Attorney – that is up to you. Just because a person has your Power of Attorney that does not give that person the right to do anything he/she pleases with your money, and he/she does not have the right to pay his/her own bills or use your money for themselves.
Alternatives To A Power Of Attorney
- Living Trust
Arizona Power Of Attorney Law
Section 13-1815 of the Arizona Revised Statutes is entitled “Unlawful Use of Power of Attorney.” The statute makes it a theft for an individual to take advantage of his/her power of attorney status. The statute reads: “An agent who holds a principal’s power of attorney and who uses or manages the principal’s assets or property with the intent to unlawfully deprive that person of the asset or property is guilty of theft.” Theft in Arizona can be as low as a class 6 felony and up to a class 2 felony, ranging on how much money is involved in the stolen property, services, firearms, and/or animals.
It is a good idea to discuss this decision of selecting who will be your agent before signing a Power of Attorney at a qualified law firm, like Kamper, Estrada & Simmons, LLP.