One of the simplest and most effective ways to protect your loved ones against exploitation as they age is to create an estate plan which gives power to a selected agent to manage their personal and financial affairs. Any well-crafted Estate Plan will include durable power of attorney documents. In power of attorney documents, a person (the “principal”) appoints an agent to make personal and/or financial decisions for them when they can no longer do so themselves. For example, in a “Power of Attorney for Property” (often referred to as a Durable Power of Attorney), the principal names an agent who can make decisions regarding the principal’s finances. Likewise, in a “Power of Attorney for Healthcare”, the agent is give authority to make decision regarding the principal’s healthcare and end of life care.
Advantage of Filing Power of Attorney Documents
Power of attorney documents may be effective immediately or they may be drafted to be effective only after the principal is unable to manage their own affairs. For example, if a principal begins to suffer from dementia, or if their judgment becomes otherwise impaired, their agent will “step into their shoes” to make decisions to protect the principal. An agent owes a fiduciary duty to the person for whom they are acting. Illinois law requires an agent named in a power of attorney document to “act in good faith for the best interest of the principal, using due care, competence, and diligence.” The agent must also “keep a complete and detailed record of all receipts, disbursements, and significant actions conducted for the principal.”
Obviously, it is essential that an individual select as their agent someone they trust will act with the utmost good faith and will always have their bests interests in mind. In the unfortunate circumstance where an agent abuses the power granted them under a power of attorney document, the law provides strong penalties and civil remedies.
With power of attorney documents in place, your loved one’s identified agent can review or monitor their bank accounts and retirement savings funds. If a new “friend” comes into your loved one’s life, their agent will be able to monitor all of their financial accounts and will immediately notice at the first hint of an suspicious or exploitative activity.
Limitations of Power of Attorney
The downside of power of attorney documents is that the aged person still has control of and access to all their finances. Therefore, a vulnerable elderly person can be persuaded to go to the bank and remove funds for his or her new “friend.” The elderly person can still write checks and add new account owners and beneficiaries. If a loved one is truly unable to manage their affairs and access to a check book could be problematic, then it may be necessary to initiate a legal proceeding requesting the Court to appoint a guardian of your loved one’s estate.
At Hays Firm, LLC, we are experienced elder law attorneys who have a great deal of experience helping families to protect their loved ones through the use of power of attorney documentation. If you are concerned about your elderly loved one, please contact one of our Chicago elder law attorneys for assistance.