Having a Power of Attorney is an essential part of an estate plan. Under a Power of Attorney, your agent, who is the person you designate to act on your behalf, could step into your shoes and handle your affairs if you ever become incapacitated. A standard Power of Attorney document gives your agent complete control over your finances, including the power to handle banking transactions, pay bills, purchase and sell real estate, and borrow money. At the same time, the law requires your agent to make decisions in good faith and that are in your best interest; this is known as a fiduciary standard.
Though uncommon, agents can abuse powers granted to them under a Power of Attorney. Because most Powers of Attorney give the agent full control over finances, an unscrupulous agent can do significant damage. Power of Attorney abuses include agents stealing funds for personal use, making gifts to themselves, and opening joint accounts and improperly helping themselves to funds in the account.
The best way to avoid Power of Attorney abuse is to select as your agent someone you trust and who has integrity. It is also a good practice not to release the Power of Attorney document to your agent until it is needed. Keep the original and copies of your Power of Attorney in a safe place. Further, customizing the powers included in your Power of Attorney to fit your situation can also help reduce the potential for abuse.