Law Offices of Roshni T. Desai
Long-term Planning For Orange County

How to play it safe when appointing a power of attorney

California residents can plan wisely for the future when they choose a power of attorney to assist with financial management. Making the decision with mental faculties intact is important, a fact that seems to favor selecting a POA before getting too old. Yet, including another person in financial decisions can be risky. What can individuals do to minimize the risk?

The American Association of Retired Persons suggests appointing two agents. Doing so, the AARP says, "spreads the responsibilities...[and] serves a checks-and-balances function, just as two accountants would manage the account of a single business." While two POAs lighten the burden for one another, they also hold each other accountable and, thus, minimize the risk that either will perform shady business deals. 

Other risk-reducing steps the AARP recommends include:

  • Limit each POA's power. Decide which agent will perform which tasks and stick to the plan.
  • Communicate, communicate, and communicate. Voice clear expectations.
  • Choose well. Find agents you trust completely.

FindLaw elaborates further. POAs should keep their personal funds separate from those they are managing. Opening a separate bank account in the relative's name is one way to ensure complete distinction. FindLaw also recommends contacting the bank to find out any specific policies management has established for handling POA accounts since each bank has its own guidelines. 

In addition to addressing the practical aspects of sharing financial responsibility, FindLaw acknowledges the inherent risk in allowing others to have control of personal banking matters. Emphasizing awareness and organization as a means of recourse, FindLaw advises paying special attention to the documentation of all monetary decisions.

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