A power of attorney is a document that authorizes a person or organization (the agent or attorney-in-fact) to represent or act on behalf of another person or organization (the principal, grantor or donor) in making decisions and taking actions relating to private affairs, business dealings, health care or legal matters.
It is often a good idea to grant power of attorney to someone you can trust if you are going to be away for a specific time, or believe that you will be incapable of making decisions due to injury or illness. This arrangement provides the best solution when important things need to be done in your absence or when you are incapacitated. Be sure to consult with a skilled and experienced probate litigation lawyers before taking this step.
Power of Attorney Misuse is Common
When granting power of attorney to anyone, you expect and desire that person to act in your best interest. Unfortunately, there is no guarantee that they will do so. Because the document gives the agent immense power, the chances of misuse and fraud are very high. In fact, power of attorney misuse is common.
Four Types of Power of Attorney Abuse
There are four types of power of attorney fraud: financial abuse, medical abuse, breach of fiduciary duty, and frauds, forgery and identity theft.
- Financial abuse includes embezzlement of the principal’s bank deposit, pension and social security, and use of a power of attorney to make investments, purchases and financial transactions for the agent’s benefit. Financial abuse makes the bulk of the fraud related to power of attorney.
- Medical abuse includes intentionally making inappropriate and harmful medical decisions such as expensive and unnecessary medical purchases, neglecting to provide adequate medical care to the principal, failing to place an elderly principal to the proper medical facility, and committing an elderly principal to a nursing facility.
- Breach of fiduciary duty includes failing to keep the principal informed about the changes in his/her financial state, medical affairs, etc., failing to obtain the principal’s consent before making a profit from his finances or accounts, and failing to act accordingly to the principal’s interests.
- Frauds, forgery and identify theft includes using the power of attorney status to open bank accounts without the principal’s knowledge, purchase insurance policies and annuities, make purchases using the principal’s credit cards, commit tax frauds, and be involved in unlawful and fraudulent activities in the principal’s guise.
Power of Attorney Misuse Victims
Most victims of power of attorney misuse are sick, disabled and/or elderly. Sadly, close family members commit most of the abuse. It is estimated that family members are directly or indirectly involved in 70% of the power of attorney abuse and 44% of such cases are related to financial matters.
The people who are most susceptible to power of attorney abuse are seniors who live alone. Usually, it’s their children who defraud them. Sometimes, a distant relative appears out of the blue to take advantage of their situation. Sometimes, it’s a fraudulent trust manager or estate planner who promises to take care of the principal’s finances but doesn’t.
Sometimes a family member who has become estranged from the principal will wrongly accuse the agent of misusing power of attorney. This is another type of abuse, but abuse nonetheless. If you are involved in a power of attorney dispute, you need legal representation. At Bennett Weston, we have a team of skilled and experienced probate litigation lawyers who assist clients on either side of a power of attorney dispute.