The Faulstich Law Firm P.C.
130 S. Bemiston
Clayton, MO 63105
|Posted on July 5, 2022 at 4:25 PM|
What Is a Power of Attorney? What Are the Risks of a Power of Attorney?
A power of attorney (POA) can be a useful tool in many situations, but you need to know the
dangers of having a POA or being named as the agent in someone else’s POA. The person who
creates and signs a power of attorney is the grantor or maker of the POA. The individual the
grantor names to act on behalf of the grantor is the agent.
You will want to talk to a Missouri estate planning attorney if you are thinking about signing a
POA or if someone asked you to serve as their agent in their POA. I will be happy to answer
your questions and draft your POA or provide legal guidance if you are the agent in someone
A Quick Overview of a Power of Attorney
A power of attorney is a legal document that gives authority for one person (the agent) to act
as directed for another person (the grantor). Only the grantor can create the POA. Someone
else cannot create a POA that gives them the legal power to take your control away from you.
Making a power of attorney is always a voluntary decision, and you can revoke a POA at any
time as long as you still have legal capacity. If you have the mental and legal capacity to create a
POA, you have the right to revoke the paper as well. The level of capacity required to make and
sign a POA is the same as for entering into a contract or signing a will.
With the POA, your bank and other financial institutions will allow your agent to do the things
that you specify in the POA, the same as if you were there in person to make those
One of the most common uses for a short-term POA is to empower someone else to attend and
sign documents for you if you will not be available to attend a real estate closing. The POA will
contain specific terms that limit what your agent (not your real estate agent, but the person
you name in the POA) is allowed to do.
The POA will expire soon after the closing. The person who serves as your agent signs the
closing documents in your name, with the deed, title, and other papers being for your benefit,
not the benefit of the agent. The agent is not allowed to take any actions other than those
specified in the POA.
With a POA, you will not have to cancel your vacation or reschedule the closing. You can truly
have your cake and eat it, too. You can go ahead with your travel plans and buy the house of
There are two main categories of long-term POAs – medical and financial. A medical power of
attorney lets you decide who will make decisions for you or follow your instructions if you
become incapacitated. A financial POA, also called a general power of attorney, empowers
someone to handle your financial matters if you become unable to do so or if you would rather
not be bothered with money management.
These POAs need to be “durable,” which means that they are still valid if you become
incapacitated. You could have a POA that is not durable, but you should talk with a lawyer
about whether that document will meet your needs.
The Danger of Having a POA
One of the greatest risks of giving another person the legal authority to handle your money or
other assets is that they might use the POA to steal from you. Trust is one of the most crucial
factors in entering into a POA.
The Risk of Serving as Someone’s Agent Under a POA
Sometimes, an agent can be personally liable for actions taken under a POA. You do not want to
get accused of mishandling someone else’s money. Honest mistakes are seldom grounds for
personal liability, but gross negligence that causes financial harm to others could lead to a
A Missouri estate planning attorney at the Faulstich Law Firm can answer your questions about
powers of attorney and draft the document for you or review a POA someone has asked you to
sign. Also, we can provide guidance on how to fulfill your duties as an agent under someone
else’s power of attorney.