Don't Give Power of Attorney to the Wrong Person

Betty Halligan, inset, signed over her power of attorney to grandson Michael. He was arrested for theft and forgery after relatives discovered he had drained Betty's life savings and was going to evict her from her own home.

(ABC)

How Does Power of Attorney Work?

When you sign over your power of attorney, you are giving someone else control over your finances in case you become incapacitated. Because you're allowing another person unfettered access to your bank accounts, retirement savings and home, you face major risks if you give that authority to the wrong person.

Sherry Parrish, the host of "Retirement Living TV" and the resident life director for Erickson Communities senior living centers, offers this advice about signing over your power of attorney.

Choose someone trustworthy and capable. Pick someone that you would trust with your life. You also need to make sure that you choose someone capable of carrying out the responsibilities that go along with having the power of attorney. This person should have good math and reading skills, be responsible about paying their bills and emotionally stable.

If you don't have family members you can trust, then find a trustworthy friend, neighbor or an advocate. Or find an impartial attorney who will not abuse the power in any way.

Related

Doctor's Appointment? Don't Go It Alone

Why You Need $1 Million to Retire

Keep a Job While Caring for Older Relative

Consider joint power of attorney. You can give power of attorney to one person, but you can also grant joint power of attorney. This protects against one party taking advantage of you. Some people give one child power of attorney and make another executor of the estate. Power of attorney only lasts as long as you're alive. Afterward, the executor has control of the estate.

Make sure you have regular accounting sessions. Meet monthly or quarterly to check that your power of attorney is paying bills and not siphoning money.

Remember, this is business, not personal. It's not about love, it's about trustworthy financial stewardship on your behalf. Don't be afraid of being rude and don't be afraid to ask the tough questions. You must ask questions in order to protect yourself.

You can always revoke power of attorney. You may have had bad luck with your original decision, but there is no reason you have to stick with it. You can revoke power of attorney at any moment. If you're in a bad situation and don't know whom to turn to, call your local government's office on aging and it will steer you in the right direction.

Find out more at AARP.org