Appointing a power of attorney is usually a very good idea, however, the importance of this decision cannot be overstated. In fact, some attorneys would suggest that who you appoint as your power of attorney is a far more important decision than who you appoint to handle your estate upon your passing.
A power of attorney gives another person (designated as an “agent”) the power to make decisions regarding the financial affairs of the person executing the power of attorney (the “principal”) during the principal’s life. Durable power of attorneys generally do not expire if the principal becomes incapacitated and will remain effective until the principal revokes it or the principal passes away. Basically, once you appoint someone as your power of attorney, anything that you can do under the law regarding your financial affairs, your agent could do for you on your behalf. Your agent would have the authority to sell property, pay credit cards, file lawsuits, redeem or roll over certificates of deposit or CDs or direct distributions from retirement plans.
Powers of attorney are not easily monitored, so there is risk that an agent may divest an incapacitated principal of his or her life savings. Certainly, Courts can intervene if there are claims raised that a power of attorney has violated the fiduciary duty owed to the principal, buts such situations are best avoided. That is why it is very important that you appoint a power of attorney that you trust completely and you are confident will always have your best interests at heart.