What are the disadvantages of being a power of attorney?
If someone has asked you to be a power of attorney, you probably are interested in:
So, keep on reading.
You don’t want to wrongfully lose assets that are rightfully yours. You also don’t want to risk being sued by creditors. You need an experienced power of attorney lawyer who can set up your POA properly.
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There are some risks of being a power of attorney.
And disadvantages of getting a power of attorney.
Some disadvantages of getting a power of attorney are that:
But the biggest disadvantage of a power of attorney is the financial risks.
A general power of attorney can:
If you don’t know and trust the person, you should not use them as a power of attorney.
A disadvantage of a power of attorney is that they have the authority to mess up your life.
You need someone who will act in your best interest.
We will cover the risks of being a power of attorney for someone down below.
A power of attorney gives someone the authority to act on your behalf.
Depending on the type of power of attorney, it allows someone to make decisions about:
A power of attorney has the fiduciary responsibility to act in the principal’s best interests.
The POA is responsible for managing some or all of the principal’s affairs.
Let’s talk about the power of attorney responsibilities and liabilities.
The responsibilities of a power of attorney depend on what type of power of attorney you have.
The types of power of attorneys are:
A general power of attorney‘s responsibilities are:
A healthcare power of attorney’s responsibilities are making decisions about:
You are not responsible for your parent’s debt if you have power of attorney.
A power of attorney will be responsible for paying for their parent’s debts.
But you pay for your parent’s debts with your parent’s money.
You will not be personally liable for your parent’s debts if you have power of attorney.
A power of attorney is not responsible for medical bills.
While they have power of attorney, they are responsible for paying for medical bills.
But the POA uses the principal’s funds to pay for medical bills.
The POA is just responsible for managing those funds and paying those medical bills.
Related: Consequences Of Not Probating A Will
A power of attorney is not responsible for debt that the principal had before they became POA.
And they won’t be responsible for debts accrued after they received power of attorney.
But there is a possibility that a power of attorney can be responsible for debts.
If a power of attorney co-signs on a loan, they are responsible for those debts.
This is not one of the disadvantages of being a power of attorney.
Because it can happen whether you’re a POA of not.
Related: Power Of Attorney vs Guardianship
Let’s discuss the risks of being a power of attorney for someone else.
When you are someone’s power of attorney, you have a fiduciary responsibility.
This means that you must act in a way that benefits the principal.
If you breach the fiduciary duties, the principal can be entitled to damages.
Meaning you could be sued if you don’t act in the best interests of the principal.
Most power of attorneys can buy real estate, take on debt, and sign contracts.
You can legally obligate the principal to any contract or agreement.
Even without taking on any personal, legal, or financial liability.
But there are risks of being power of attorney under certain conditions, such as:
Let’s cover these disadvantages of being a power of attorney more in-depth.
Related: Do Wills Have To Be Probated
If you have power of attorney you cannot be held liable for debts accrued before you became a POA.
One of the disadvantages of being a power of attorney is that you may become financially liable.
But after you become a power of attorney, you can be held liable for financial decisions.
You can be held liable for the principal’s debt if you:
A power of attorney cannot be held liable for financial obligations outside of their control.
But one of the risks of being a power of attorney is that you can be held liable for debts.
Another disadvantage of being a power of attorney is that they can financially ruin you.
This is true whether:
And this doesn’t only apply to power of attorneys stealing from you.
Mismanagement can be someone who just doesn’t know what to do with your property.
A power of attorney can:
These events can happen accidentally or unintentionally.
You need to choose a power of attorney carefully.
So that you can reduce the risks of a power of attorney.
But there are people who use their power of attorney to:
In these instances, they are breaking the law.
But the authorities can’t take action if they are unaware of the illegal activities.
If no one is checking on what the power of attorney is doing, they can get away with a lot.
If you want a reliable, attorney-created power of attorney, fill out the form below.
Our experienced attorneys will create your power of attorney, which means:
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