An article in a publication called Moneymade relects on concerns we have been discussing about children making unknown and unneeded use of a parent’s power of attorney. We saw this in a case in 2021 where pop gave each of his four kids a POA. One thing those kids could agree on was that their stepmom was evil and deserved nothing. So, the kids started to loot the substantial 401K account to protect pops from evil stepmom. Realize that those draws are all taxable events which stepmom and pops will owe taxes on. I had to file a divorce against pops on behalf of stepmom to stop the bleeding of the estate. The Moneymade article has similar concerns.
Some guidance. You don’t want more than one agent acting on your behalf using a power of attorney. The qualifications for that role are (a) trust (b) proximity in a physical sense and (c) common sense in managing money. But, even then a trusted child or friend with a substance or gaming addiction or just short of funds can wreak havoc with your security.
So, what about this? Pick the kid you think best meets the three criteria. Sign the power but give the original instrument to another child or trusted friend. That person has no power exceptto refuse to deliver the power if he or she senses there is no need to use it; e.g., you are fully functioning and can pay your own bills. When you do start to lose it the kid with the power has to address the topic with the person in physical possession of the instrument. That person has no reason to withhold the power since he or she presumably wants your bills paid as well. Hopefully, they still like you that much.
One other thing that might be considered. Once the power is “launched” and being used, the person using it should account once a quarter or once a year on the transactions where it was used. That way, your future heirs have some means of knowing that your POA has not mortgaged your house or sold your Florida condo. If the accounting is not filed with the future “heirs” within three months of its due date, the power is revoked and a guardianship should be filed to assess how best to manage the assets during your lifetime.
As we have noted. Baby-boomers have real money and they are sometimes outlasting their cognitive abilities. That money needs to be protected from friendly looting. Not a pretty picture, but it seems a necessary one.
The article