Power of attorney (POA) is an estate planning instrument that authorizes another individual to act on your behalf in legal, personal, and professional affairs.
But granting this authority can put people at risk for abuse. In many cases, the person who has issued the POA (grantor) may be incapacitated due to age, health issues, or financial limitations.
This increases the damages that may be caused when the person granted the authority (agent) abuses their position.
Preventing power of attorney abuse requires family members and loved ones to recognize its signs and know the legal options that are available to them.
Power of Attorney Essentials
Each state has its own regulations for creating POA agreements. It’s a good idea to consult with a skilled estate planning attorney prior to creating your POA so that you understand all applicable laws.
The agent you select in your POA has the ability to make decisions related to your finances, health care, consent of medical treatments, and guardianship.
Unfortunately, the limited capacity of grantors who have special needs can put them at risk for power of attorney abuse.
Power of Attorney Abuse Risks
Many power of attorney abuse cases involve financial motives, and a majority of these are committed by family members. Choosing the wrong person to act as the agent is a common factor leading to abuse.
The agent has a fiduciary duty to the grantor and must provide all information related to changes in affairs, accounts, and other aspects outlined in the POA agreement.
Transferring property and other assets without approval is one example of POA abuses that grantors may face.
Grantors who are disabled, elderly, or ill can be the most vulnerable to POA abuses. Individuals can use these as opportunities commit acts that infringe upon the best interests of grantors.
Elder adults who have a small number of relatives may also be at risk for abuse. It’s not uncommon for a distant relative to offer to serve as an agent while having other motives in mind.
Estate planners and other professionals can commit abuses by signing on to manage the grantor’s financial affairs while appointing themselves as POA agents. This gives them the ability to commit fraudulent acts that exploit vulnerable individuals.
Recognizing and Preventing Power of Attorney Abuse
Agents must be willing to provide ongoing communication with grantors and their family members in relation to the affairs for which they are responsible.
If agents act in secrecy or if family members are unable to communicate directly with an agent, there may be reason to believe that some abuse may be taking place.
Grantors and their loved ones should monitor changes that arise in affairs related to their finances or medical care. Information related to these and other aspects of a POA agreement must be shared by the agent.
If an agent presents new documents to be signed by the grantor, family members should investigate further to prevent any actions that might exploit a loved one.
Issues related to fraud, identity theft, and other financial wrongdoings should be monitored to ensure that the grantor’s best interests are fully protected.
Family members must openly discuss issues related to a POA agreement. They must make sure that the agent is willing and able to carry out their duties.
Physicians, social workers, and other professionals can be a source of information related to issues that may pertain to possible abuses.
Victims who are isolated from friends and families are at risk for exploitation by agents. Maintaining a strong social network may help them communicate issues as they arise to prevent further abuses.
Kevin Tharpe
Latest posts by Kevin Tharpe (see all)
- Key (Future) Changes To Estate Taxes - April 15, 2024
