Petitioning the Court
Financial powers of attorney are governed by state law. In most states, if a principal is competent to make financial decisions, she may revoke a POA at any time. However, if the principal is no longer able to make competent financial decisions, which is often the case with advanced age, the court will need to be involved if an abuse of power is alleged. Typically, the agent review process must be initiated by an "interested person," as defined in state law. Interested persons generally include close relatives and prospective beneficiaries under a will.
Authority to Act
One way the court can determine if abuse occurred is through evidence that the agent exceeded his authority under the POA. Here, the court will need to analyze the language contained in the document for the purposes of determining the intent of the principal. POA's are construed strictly, meaning that an agent only has the authority to act where specified or where necessary to carry out broad instructions. The specificity requirement is particularly important regarding gifting. Agents with the authority to make gifts may attempt to characterize misappropriated funds as gifts to themselves from the principal. For that reason, some states, including Maryland, do not allow an agent to make a gift to himself unless this authority is expressly included in the POA.
Even if an agent is operating under the express terms of the POA, she is required to act with the principal's best interest in mind. This is known as fiduciary duty, which is a standard of reasonableness, subject to the court’s review. For example, if an agent has the power to purchase investment real estate, the court might consider this unreasonable conduct if the agent cleared out the principal's bank account to buy an apartment complex, leaving the principal with no money to pay living expenses. Going hand in hand with this duty is the requirement that the agent maintain detailed records and accounting of each transaction. The presence or lack of these records can be important in establishing why the agent acted and whether the agent breached his fiduciary duty.
If you can establish that an agent is abusing his authority, one remedy available to the court is to compel that the agent comply with the POA, perhaps subject to increased reporting requirements. A court may also remove the authority of the agent and appoint a successor agent. If the agent was dishonest, the court may deny compensation for his services. In cases where funds were used for an improper purpose, the court can require that these amounts be returned or the court can issue an order for damages against the agent.