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Estate planning tools like powers of attorney can be abused

Because of the large number of retirees in Florida, issues affecting estate planning and the defrauding of older people are of great importance in the state. While planning tools such as powers of attorney are important and commonly used by people attempting to conserve their wealth and ensure their wishes are followed, these tools can also be an avenue of abuse. According to a MetLife study, approximately a third of all elder financial abuse cases involve family members, neighbors or friends. Many of these cases can involve a power of attorney.

For example, a Connecticut woman's parents, who were living in Florida, were defrauded by a man who gained their trust. The man had the woman's Alzheimer's stricken father sign a power of attorney that the man used to take the couple's house and money. He also managed to convince the woman's mother to name him as a beneficiary in her will.

When used correctly by a trust individual, powers of attorney can help avoid scenarios like the one above. Especially useful are "durable" powers of attorney that are made when an individual still has full decision-making capacity, but survive that person's incapacity. The idea is to designate someone who can be trusted while a person still has full control of his or her faculties. Otherwise, family members may be forced to try the complex and expensive process of establishing guardianship, which can mean going to court.

People planning the distribution of their estate and deciding who will be able to make decisions for them in the case they become incapacitated need to pick someone they trust completely for any power of attorney. It is also a good idea to revisit the choice periodically, as a power of attorney can be revoked if the principal is still competent. For many Florida residents and their families, these decisions are incredibly important, and should be carefully considered in the context of the law and its ramifications.

Source: marketwatch.com, "Power of attorney: It's easily abused," Elizabeth O'Brien, March 19, 2013

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