When planning your estate, you can carefully craft your power of attorney documents to suit your own needs. However, there’s always the potential your chosen agent will misuse the powers granted to them. Even if you trust that person implicitly, building some safeguards into your power of attorney document can be quite helpful and give you some extra peace of mind.

Here are a few examples of such safeguards you might consider adding to your financial power of attorney.

  • Have another party handle some accounting: If you lose capacity to handle your own financial affairs, there’s a chance your power of attorney will lose all oversight. Therefore, it can help to have another person watching financial transactions as a sort of backup in case you become incapacitated. This person can be a professional accountant, an attorney or simply a trusted friend or relative—the idea is to provide extra accountability and oversight when it comes to the use of your money.
  • Establish an inventory of assets: Having an inventory of your assets prepared before your agent starts managing your assets will give you a baseline for comparison in the future. Share this inventory with your trusted party who will also act as an oversight for accounting matters.
  • Impose limits on changes to beneficiaries: By limiting changes to beneficiaries, you’ll make sure your wishes remain honored and that your chosen agent does not abuse his or her power by, for example, removing beneficiary status from a person he or she does not like. This includes limiting changes to rights of survivorship in bank accounts, or changes to any beneficiary designations in wills, insurance policies, trusts, retirement accounts, annuities and investment portfolios.
  • Set the agent’s abilities and limits regarding gifts: As a general rule, your safest option is to prohibit your agent from making any types of gifts. But if you have had a pattern of giving throughout your life and want that to continue even during your incapacitation, you can set limits regarding gifting. Do so by identifying only the recipients you wish to receive gifts, or classes of recipients you will allow, and by placing limits on the frequency and amounts of these gifts.
  • Add safeguards for large transactions: You could, for example, have a pair of co-agents to share the responsibility of managing your finances, so long as they are able to work together. You might also consider adding an extra step for particularly large transactions, requiring approval in the form of a signature from this third party. Such transactions could include major investments or purchases of a home or vehicle.

It is important you choose an agent you can trust to be responsible with your finances, but even then, there are never any guarantees that your agent will not abuse his or her power. Talk to an estate planning attorney in the U.S. Virgin Islands to learn more about how you can protect your estate by adding some safeguards into your power of attorney.

Nash Davis is an Associate Attorney in the Corporate, Tax and Estate Planning Practice Group at BoltNagi PC, a full service business law firm serving the U.S. Virgin Islands.