Friday, December 18, 2009

The Dark Side of POAs.

CNN is reporting that the Anthony Marshall trial is entering the sentencing phase.

Mr. Marshall is the son of New York socialite, Brooke Astor. Mr. Marshall was convicted of grand larceny and scheming to defraud his mother's estate. During his mother's life, he used his power as Ms. Astor's power of attorney to take money out of her estate for himself. Ms. Astor's will left most of her estate, upon her death, to various charities.

This case illustrates the need for caution when executing power of attorneys. POAs are useful tools to make sure your financial affairs, like paying for the heating bill to keep your pipes from freezing... (can you tell I'm writing this in Minnesota, in January?) etc, are taken care of if you are alive, but incapable of doing it yourself. POAs are extremely helpful in a majority of circumstances and everyone should consider executing a POA.

However, care should be taken when choosing who will have that power. A POA is like giving someone a blank check to your entire financial life. If you don't have someone you trust to act in that capacity, it may be better not to execute a POA.

This is especially true in states, including Minnesota, where durable POA's (those which are effective when someone does not have the capacity to make financial and legal decisions) are effective from the moment they are signed. That means that the person you name in your POA, has the blank check even before you are incapacitated.

All the caution in the world may not have prevented the Astor tragedy, but everyone should carefully consider who they name in their POA.

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