What Protects Families From Power of Attorney Abuse?

By Stephanie Reid

A power of attorney is a legal status that grants an individual powers to make financial or health decisions on behalf of another person. The person granting the power of attorney is the principal and the individual receiving the powers is the agent. Agents are required to act in the best interests of the principal; however, it is not uncommon for agents to take advantage of the situation by stealing money or unlawfully selling property. It may be possible to safeguard against this situation by using specific language in the power of attorney document or by appointing more than one power of attorney. If the damage has already been done, there are civil and criminal sanctions available.

A power of attorney is a legal status that grants an individual powers to make financial or health decisions on behalf of another person. The person granting the power of attorney is the principal and the individual receiving the powers is the agent. Agents are required to act in the best interests of the principal; however, it is not uncommon for agents to take advantage of the situation by stealing money or unlawfully selling property. It may be possible to safeguard against this situation by using specific language in the power of attorney document or by appointing more than one power of attorney. If the damage has already been done, there are civil and criminal sanctions available.

Limiting the Scope

As a way to avoid power of attorney abuse, the principal may decide to execute a limited-scope power of attorney that does not grant the agent sweeping powers with regard to financial decisions. For instance, the principal may indicate that the agent may only make decisions regarding personal property and personal maintenance but not real property, investments or gifts. The power of attorney document may also contain language limiting the agent's ability to change account beneficiaries, amend a living trust or make donations.

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Appointing Co-Agents

A principal may appoint more than one individual to act as agent. This arrangement could serve as a balance-of-powers to ensure no one takes advantage of the power of attorney arrangement. If the agent believes two or more people can work together to monitor the principal's finances and personal matters, it may be advantageous to name co-agents and expressly state in the document that decisions must be made together.

Revocation

If the principal becomes aware of power of attorney abuse, he may revoke the arrangement at any time. In most jurisdictions, to take effect, a revocation must be in writing and notarized. If a principal has elected more than one agent, the principal may revoke power of attorney to just one of those agents, without affecting the relationship with the others.

Appointing a Guardian

In most states, once a principal has become incompetent, he cannot revoke a power of attorney. In order to protect the principal from possible power of attorney abuse, another family member, close friend or even a nursing home can file a guardianship petition in order to exercise guardianship over the victim of power of attorney abuse. Once a guardianship is in place, the guardian's wishes trump those of the power of attorney and the guardian may then revoke or terminate the power of attorney on behalf of the ward.

Criminal and Civil Penalties

Depending on the circumstances surrounding the power of attorney abuse, the perpetrator could face criminal charges including exploitation, embezzlement, forgery, larceny, money laundering, theft or any other charge appropriate under the facts of the case. Most states have also enacted sentencing enhancements for crimes against the elderly or incompetent. Possible civil penalties include restitution, damages, costs, attorney's fees and any other appropriate remedies.

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Definitions of Durable and Non-Durable Power of Attorney

References

Related articles

Can a Power of Attorney Be Non-Durable & Non-Revocable at the Same Time?

A power of attorney, or POA, is a legal document that grants another person the authority to manage finances on your behalf. The person granting the authority is known as the principal while the agent, or attorney-in-fact, acts on behalf of the principal. The principal may give the agent power to perform only specific tasks, such as filing taxes, or grant broad authority to take care of all of the principal's financial matters. Because non-revocable POAs are generally reserved for business circumstances, personal POAs are rarely non-revocable.

Power of Attorney Responsibilities

A power of attorney gives you (the agent) the legal right to act on behalf of someone else (the principal). The power of attorney document may allow you to make decisions about financial matters, medical treatment or living arrangements, or represent the principal in any legal matters. The laws of each state control how a power of attorney may be drawn up.

Can a Judge Take Away Someone's Durable Power of Attorney?

An agent under a durable power of attorney has legal authority over someone else's finances or medical care decisions. But he is also a fiduciary, held to the highest duty of care known to the law. If the agent violates that duty of care by failing to act in the best interests of the principal, a court can take away his authority and hold him accountable.

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