A power of attorney can be one of those documents you hope your family never has to use—but if something happens and you can no longer manage your own affairs, having one in place can make an enormous difference.
In the United States, the Consumer Financial Protection Bureau estimates that around 22 million people age 60 and older have designated someone to act as their financial power of attorney. That gives you an idea of just how common these arrangements are.
Unfortunately, giving someone access to your finances also creates opportunities for problems. FinCEN reported that financial institutions filed about 155,415 reports of suspected elder financial exploitation during 2022 and 2023, involving more than $27 billion in reported suspicious activity.
A power of attorney allows you to choose someone you trust—called an agent or attorney, depending on where you live—to handle certain matters on your behalf. That authority can be incredibly helpful, but it also comes with significant responsibility. And when family members disagree about how that authority is being used, a relatively simple legal document can become the centre of a much bigger dispute.
Common power of attorney problems include financial exploitation, family disagreements, unclear instructions, forged or altered documents, and questions about whether a power of attorney is valid or still in effect.
Here are seven problems families commonly encounter—and some ways to avoid them.
1. Choosing the Wrong Agent
A power of attorney allows you to choose someone you trust to make certain decisions or take certain actions on your behalf if you are unable to do so yourself. Depending on the type of power of attorney and where you live, that authority might cover financial and property matters, medical or health-care decisions, personal-care decisions, or some combination of these. The person you appoint may be called an agent, attorney, or another name depending on the jurisdiction.
One of the biggest power of attorney problems can happen before the document is ever signed: choosing the wrong person to act as your agent. Families sometimes default to the oldest child, the child who lives closest, or the person everyone assumes will take on the responsibility. But those aren’t necessarily the best reasons to make someone your agent.
The right person needs to be trustworthy and capable of handling the responsibilities involved. If you’re giving someone financial authority, that might include managing bank accounts, paying bills, handling investments, or dealing with property. If you’re giving someone health-care or personal-care authority, they may be making decisions about medical treatment or other aspects of your care when you’re unable to make those decisions yourself (as my aunt did when my grandma’s dementia made her unable to make those decisions for herself).
They don’t necessarily need financial credentials or legal training or a medical background. They do need to be organized, responsible, willing to communicate, and able to put the other person’s interests ahead of their own.
Clear communication with the rest of the family can help, too. Even when an agent is doing everything correctly, family members may become suspicious if they don’t know what is happening with their loved one’s finances.
2. Losing Control Once the Document Is Signed
Another common concern is giving up more control than you intended.
A power of attorney gives someone else legal authority to act on your behalf. Exactly what they can do depends on the document and the law where you live. A broadly worded document may give an agent considerable authority over bank accounts, investments, property, and other financial matters. That can be useful when you genuinely need someone to step in—but it can also be surprising if you didn’t realize how broad the authority was.
Before signing a power of attorney, go through the document carefully and understand exactly what authority you’re giving away. If you want to limit the agent’s powers, those limitations should be clearly included in the document.
Canadian note: In Canada, the rules and terminology vary by province and territory. A power of attorney generally deals with financial and property matters. Documents dealing with personal care or health decisions may have different names and requirements depending on where you live.
3. A Bank or Other Financial Institution Refuses the Document
Another frustrating situation can arise when an institution refuses to accept a power of attorney.
Banks, investment companies, and other financial institutions may have their own procedures for reviewing these documents. An institution may question a document because it is old, unclear, incomplete, or doesn’t meet its current requirements. That can create a major headache for an agent who needs to pay bills, access accounts, or handle other financial responsibilities.
One way to reduce the possibility of surprises is to find out in advance what your financial institutions require. If you’re creating a new power of attorney, you may also want to ask whether they have their own forms or review process. Taking care of those details while you’re healthy and able to participate is much easier than trying to sort them out during a medical or financial crisis.
4. Confusion Over Copies and Original Documents
Families don’t always think about where the original power of attorney will be kept until someone actually needs it. Some institutions may accept a copy, while others may want to see the original or a certified copy. Requirements can also vary depending on what you’re trying to do with the document.
Decide ahead of time where the original will be kept and who should have access to copies. Your attorney or another trusted person should know how to locate the document when it is needed.
It’s also worth asking your lawyer or relevant financial institutions about their requirements rather than assuming every organization will handle the document the same way.
5. Misunderstanding What Misuse Looks Like
Most people who agree to act as an agent are trying to help. But a power of attorney gives someone real authority over another person’s finances and property, which can create opportunities for misuse.
Sometimes the misuse is obvious, such as taking money for personal expenses. Other situations can be much harder for a family to sort out. An agent may believe they are entitled to use money in a certain way while another family member believes those transactions are inappropriate.
Good recordkeeping can go a long way toward preventing these disputes. Keeping receipts, account statements, and other records makes it easier to show where money went and why.
You can also consider naming a backup agent or building reasonable oversight into the arrangement. Depending on the law where you live, there may be ways to require an agent to provide an accounting or otherwise document their actions.
When family members believe an agent is misusing funds—or question whether the person who signed the power of attorney had the mental capacity to do so—the dispute can eventually end up in court.
A court may be asked to review financial records, determine whether the document is valid, remove or replace an agent, or address alleged financial abuse. What begins as a family disagreement can quickly become a complicated and expensive legal battle.
If you’re dealing with suspected misuse of a power of attorney, getting legal advice early can help you understand your options. Wills & probate lawyer Dayna M. DePerro and the other attorneys at Kelley Ferraro, LLC, handle wills, probate, and related litigation.
Canadian note: Canadian provinces have their own rules for monitoring and responding to an attorney’s actions. For example, British Columbia’s Power of Attorney Act includes provisions addressing improper exercise of authority, investigations, reporting to the Public Guardian and Trustee, and court orders.
6. Letting the Document Go Stale
A power of attorney isn’t necessarily something you can sign once and forget about forever. Life changes. People move. Relationships change. The person you trusted ten years ago may no longer be the person you would choose today. Your financial situation may also look completely different. That’s why it’s a good idea to review your power of attorney (and your entire will) periodically.
You may decide that you want to name a different agent, add a backup agent, change the scope of someone’s authority, or replace an old document altogether. Reviewing the document while you still have the legal capacity to make changes gives you much more flexibility than discovering a problem after you can no longer update it yourself.
7. Confusion Over When the Agent’s Authority Begins
Another common problem is misunderstanding when a power of attorney actually takes effect. Some powers of attorney become effective as soon as they are signed. Others are designed to take effect only after a particular event occurs, such as the person becoming mentally incapable.
If family members misunderstand which type of document they are dealing with, they may assume an agent can act when they actually cannot—or wait for a triggering event that the document doesn’t require.
Read the document carefully and make sure everyone involved understands when the agent’s authority begins and what needs to happen before they can act.
The terminology can vary by jurisdiction, too. In Canada, for example, an enduring or continuing power of attorney can generally continue to operate after the person becomes mentally incapable. The exact requirements differ between provinces and territories.
Getting Ahead of Power of Attorney Problems
None of these potential problems mean you should avoid making a power of attorney. In fact, having a clear, properly prepared document can make things much easier for your family if you eventually need someone to step in.
The biggest advantage of planning ahead is that you get to choose who will help you and what authority that person will have while you are still able to make those decisions yourself.
Take some time to think about who you trust, what responsibilities you may need help with, and what limits you want to put in place. Make sure the person you choose understands the responsibility they’re taking on. It’s also worth reviewing the document periodically and making sure your family knows where to find it.
If you wait until there’s an emergency, you may no longer be able to make the decisions yourself. In some circumstances, your family may then have to go through a court-supervised guardianship or similar proceeding to obtain authority to manage your affairs.
The laws and terminology surrounding powers of attorney vary considerably by jurisdiction, so getting legal advice can be especially helpful if you have a complicated family situation, significant assets, or property in more than one jurisdiction.
Planning ahead may take a little time now, but it can save your family a lot of confusion—and potentially a very expensive legal battle—later.
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