The Power of Attorney – Weapon of Mass Destruction?

The Power of Attorney form is a misnamed document. It actually has nothing to do with being an attorney. It is a document in which one person authorizes another person to act in place of him (or her) for one or more purposes. A licensed probate lawyer can explain this in more detail but here are some examples:

John Smith has agreed purchase a new home. Typically, the closing on a real estate transaction takes place at the office of a Title Company. Assume Smith learns that he has to travel out of town for business on the date scheduled for closing. In such circumstances, he can have an attorney draw up a Power of Attorney form which will enable Smith’s trusted friend, Sam Brown, to take his place at the closing, and sign all of the necessary documents needed to purchase the home.  A properly drafted Power of Attorney for such occasion will have built in safeguards. For example:

—    It will be limited in time. It should expire the date after the closing.

—    It will be limited in scope. I will contain specific language that empowers Brown only to act a signatory for one parcel of property.

Sometimes a broader Power of Attorney form can be an appropriate document for people to sign. For example, assume that an elderly couple in a long term marriage is meeting with an attorney to prepare their Wills and other Estate Planning documents. Often such attorneys will advise the husband and wife to each sign a Power of Attorney form so that, in the event one of them becomes gravely ill and unable to sign important documents, the other spouse can sign these documents for both of them.

But here’s where real problems can develop – When a person signs a broad form Power of Attorney, allowing a friend or relative to sign any and all documents in his place. Perhaps the person is going on a long term visitation of business trip out of town. Certainly the Power of Attorney form may be tempting as a convenience. But the potentially grave harm that can be done by the designated friend or relative cannot be underestimated. For example, an unscrupulous friend or relative with a broad form Power of Attorney is capable of doing the following:

—    Selling all of the real estate of the trusting person.

—    Emptying the bank accounts and brokerage accounts of that person.

—    Enter into binding contracts, exposing the person to thousands of dollars of bills and accounts for work performed.

For the above reasons one should think very carefully before granting ANYONE a broad form Power of Attorney.