Are you considering setting up a power of attorney for yourself? A power of attorney can be a useful document in many cases. It establishes another person as your financial agent. That means the designated power of attorney can write checks, pay bills, make investment decisions, and even take out loans on a person's behalf. That kind of agreement can be helpful if a person is hospitalized or otherwise incapacitated, which could be more likely as you advance in age. Of course, a power of attorney can also open the doors for theft and financial abuse, which does happen from time to time. Here are three tips to help your elderly relative prevent power of attorney abuse:

Make sure the power of attorney is someone that can be trusted. This is the first and most important step in preventing abuse. Beware of distant or little-seen relatives who offer up their services as power of attorney. Sometimes, an elderly person will choose someone to be power of attorney because that person has business knowledge or is a successful investor. However, trustworthiness is usually the most important quality a power of attorney can have. Before you sign the power of attorney, consider how well you know the person you're considering for the job and whether they really have your best interests at heart.

Don't release the document until it is necessary. Just because you sign the power of attorney doesn't mean it's active. To be active, the power of attorney needs to be released to courts, banks, creditors, and anyone else involved in a financial transaction. However, once the document is released, your power of attorney has full authority to make financial decisions on your behalf.

Instead of releasing it, simply sign it and give it to your attorney for safekeeping. Then he or she can be responsible for releasing it should you become incapacitated.

Take back the power of attorney as soon as you are able. You incapacitation may only be temporary. For example, you may have an extended hospital stay from which you are eventually released. As soon as you are physically and mentally able, have your lawyer draft a letter recalling the power of attorney. Then, release that letter to your designated power of attorney and any financial institutions that are relevant. That will void the power of attorney.

Also, should there be any theft, this letter can be used in court to show when you were able to manage finances again. If transfers or transactions occur after this date, you can prove that they were not authorized by you.

If you suspect that your power of attorney has stolen money from you or used your money for their benefit, contact an elder law attorney immediately. They can help you take action and recover your funds. To find out more, speak with someone like Cormac McEnery.