At some point in our lives, many of us are chosen to serve as a Power of Attorney for an elderly or an incapacitated person who may need assistance with their day to day affairs, whether due to infirmity, immobility, or issues with their mental capacity. Prior to taking actions utilizing the Power of Attorney, it is a good idea for an individual to have ground work laid out to properly memorialize any actions taken while utilizing the Power of Attorney to avoid potential future legal action. As a litigator who works extensively in probate litigation, I have seen many instances where a lawsuit is filed due to alleged abuses of a Power of Attorney. As such, below are some simple rules to follow when utilizing a Power of Attorney.
The first suggestion would be to utilize accounting software, such as Microsoft Excel, in order to create a spreadsheet wherein you would track any and all transactions when utilizing the Power of Attorney. Each transaction can be recorded in an Excel spreadsheet, and furthermore, all relevant receipts can be indexed which are related to the expense. It is suggested that you spend the time to organize and categorize any and all expenses, as well as the accompanying receipts and keep them organized in a notebook which corresponds with the Excel spreadsheet. In this notebook, it would also make sense for you to maintain copies of all bills which facilitated and required the payment. The use of an Excel spreadsheet when coupled with the retention of original bills and receipts is a very strong step towards alleviating any confusion concerning the use of the Power of Attorney should an accountant be required.
Another important consideration would be to ensure that the party you are assisting has a separate bank account that is not co-mingled with any assets of your own. Is it is important while utilizing a Power of Attorney that you do not co-mingle any of your assets, or the assets of the person you are assisting. Maintaining separate and distinct accounts is a good way of ensuring that there is no co-mingling of funds, and as well, alleviates allegations as to the misuse of an account. In this same breath, it is suggested that a party save any and all bank account statements and keep them in the same notebook which contains the accounting and the Excel spreadsheet that was discussed above.
If there are concerns that a sibling or other family member may challenge your expenses under the Power of Attorney, it is suggested that you continuously invite them to review any expenses on no less than a quarterly basis. By providing them with this opportunity it may resolve any issues which might lead to future litigation. Above all else, in order to avoid litigation it is essential that while serving as a Power of Attorney that you maintain transparency with all accounts and that you maintain and organize your records.