Tips on Drafting an Enduring Power of Attorney to Prevent Financial Abuse
Appointing an Enduring Power of Attorney (EPoA/EPA) is an essential part of future planning, it’s vital to draft the document carefully to minimize the risk of financial abuse. Here are some tips to ensure the EPA is structured to protect your assets and interests: With financial abuse on the rise, it is vital to do what you can to protect your assets. Here, we uncover some tips on drafting an Enduring Power of Attorney to help prevent financial abuse.
Choose a Trustworthy Attorney
Selecting the right person is the most critical step in preventing financial abuse. Choose someone who is not only trustworthy but also has the financial acumen to manage your affairs responsibly. It’s advisable to appoint a professional or an independent third party if there are concerns about potential conflicts within the family.
Consider Appointing Multiple Attorneys
Appointing more than one attorney can provide a system of checks and balances. Also, require that they make decisions jointly. This in turn, reduces the likelihood of any single person misusing their power. Alternatively, assign different attorneys for different tasks—one for financial matters and another for personal or health decisions.
Clearly Define the Scope of Authority
The EPA should explicitly outline what decisions the attorney can and cannot make. For example, you might limit the attorney’s ability to make large financial transactions. Stipulate they must consult a financial advisor or gaining approval from another trusted individual.
Include Regular Reporting Requirements
To increase transparency and accountability, include a clause that requires the attorney to provide regular reports on financial transactions. These decisions must be given to a third party, such as a family member, lawyer, or accountant. This can deter potential abuse and ensure the principal’s assets are being managed appropriately.
Specify Safeguards for High-Risk Transactions
Include provisions that require additional oversight for significant financial decisions. These may include selling property or accessing large sums of money. This might involve getting a second signature or approval from an independent advisor.
Set Up a Monitoring Mechanism
Consider establishing a system where an independent party, such as a legal professional or accountant, periodically reviews the attorney’s actions. All in all, third-party monitoring can help detect and prevent any potential misuse of power early on.
Include a Revocation Clause
Make it clear that the EPA can be revoked if the attorney is found to be acting against the principal’s best interests. Basically, having a clear process for revocation can empower you to act quickly if concerns arise.
Consult Legal and Financial Professionals
Another key point when drafting the EPA, is to consult with legal and financial professionals who can help tailor the document to your specific needs. Also, it needs to comply with local laws. Basically, they can also provide advice on additional safeguards that might be appropriate given your circumstances.
The Responsibility and Protection of an Enduring Power of Attorney
Being appointed as an Enduring Power of Attorney is a significant responsibility. It requires deep commitment to the well-being of the principal and a thorough understanding of legal obligations. By carefully drafting the EPA and implementing safeguards, you can greatly reduce the risk of financial abuse. This in turn, can ensure your best interests are protected, and wishes are respected.
If you need more information or guidance on appointing an Enduring Power of Attorney or understanding your responsibilities in this role, Trusted Aged Care Services is here to help. Contact us today to discuss how we can support you through this important process. Or reach out to your lawyer to ensure you draft an Enduring Power of Attorney designed to help prevent financial abuse.