A power of attorney is a legal document giving an agent the authority to act on someone else’s behalf. In Reno, Nevada, the person creating the power of attorney is known as the “principal,” and that person chooses a person who may act on their behalf called the “agent.” A power of attorney is frequently used to bestow power and authority to the agent to handle the principal’s financial and/or medical decisions.
Even though a power of attorney in Reno can be very useful, as with most things, there are some disadvantages that should be considered before giving someone authority to act on your behalf. Since your agent will be given full legal authority to act on your behalf, it is critical that you choose someone trustworthy and whom you believe will act only in your best interests.
Disadvantages of a Power of Attorney in Reno
An agent is not subject to direct oversight
An agent is required to follow your directions whenever taking actions on your behalf. However, she could make mistakes or, even worse, use her authority fraudulently. Because the agent makes decisions and takes actions on your behalf, while you are not present, you will not have immediate control over the actions taken.
For instance, your agent may have the authority to withdraw money from all of your bank accounts. Although you asked her to withdraw only a certain amount from one of them, she may mistakenly take money from the wrong account. What’s worse, she may take money from your bank account entirely without permission. While the agent may be liable to you, the bank, unfortunately, cannot be held responsible, as long as the power of attorney is valid. Also, you should understand that almost all powers of attorney are “durable,” meaning they are valid even if the principal later becomes incapacitated. Challenging the agent’s actions in that case becomes even more complicated.
Entities may not recognize your agent’s authority
Even though a power of attorney is a legally binding document, and under Nevada law institutions are required to accept a valid power of attorney, some entities such as banks or mortgage companies, may require additional internal procedures before they will recognize the authority of your agent. If your power of attorney does not meet the bank’s internal policies, your agent will have trouble accessing your accounts at that particular institution. You may avoid some hassles by using the bank’s own power of attorney form, if the bank has one.
You must provide notice of revocation to all third-parties
It is not difficult, generally speaking, to revoke a power of attorney. Though the rules of revocation are different from one state to another, it is generally required to be in writing and all third parties with whom the power of attorney has been used, must be notified. If the power of attorney was used in the transfer of real estate, it was likely recorded; therefore, the revocation must also be recorded. This is a very important step. If an institution does not receive proper notice, your agent could continue to act for you without your authority and the institution would not be the wiser. In that situation, if notice was not provided, the institution would not be liable for any financial loss resulting from your agent’s unauthorized acts.
If you have questions or concerns regarding creating a power of attorney in Reno, and whether there are alternatives that are better suited for your needs, contact your Reno estate planning attorney for assistance.