A Power of Attorney is a very powerful tool. This is why it is a good thing and also a very dangerous thing. It allows you to give someone (referred to as “Attorney”) the full power to make all financial decisions on your behalf. It can either take effect the moment you sign it, or it can take effect at a future time when one or more doctors certify that you are unable to manage your own affairs.
Having it take effect immediately is great if you travel frequently because someone else can renew your mortgage, handle your banking, and look after other financial matters (including selling your home) on your behalf.
Requiring it to only be usable after a doctor has said you can’t manage your own affairs is good in that it offers you protection from potential financial abuse, but it can be cumbersome for the person you’ve named as Attorney to get the doctors to do the reports and swear the affidavits required for it to take effect.
A Power of Attorney is one the one hand a very responsible thing to prepare so that a trusted person can look after your finances, but there is the potential for abuse. It is less worrying when spouses grant the power to each other (as they generally share their finances) than when someone gives that power to an adult child.
If you have more than one child and only one of them is named as Attorney, it can cause discord among the siblings if one believes that the Attorney is withdrawing funds for their own purposes. This can be tempered by naming more than one Attorney to act jointly – but this means that they both need to attend to handle financial matters and this might not be feasible.
I have definitely come across situations where there is suspected elder abuse as one child accesses their parent’s finances a little too liberally. They might not even think they are committing fraud, they might just be acting from a sense of entitlement or a misguided belief that this is what their parent would have wanted. Stepping in to strip away their power is doable when the parent is mentally competent, and requires another trusted person to seek a court order if they are not.