Abuses of Power of Attorney

Abuses of Power Of Attorney – What to do and not to do (and a little of what to look  for)

            When I speak to groups of professionals who deal with seniors, I often ask about abuse. I will ask if anyone has seen a person who is holding the power of attorney for another (called the agent or attorney in fact) abuse that power. Without exception, I see the heads nod, usually accompanied by a look of sadness, like the grimace of a dull pain. I then ask “How many of you have been involved in actively pursuing the abuser?” I have only once had a hand go up.

            Most professionals feel powerless to ‘blow the whistle’ when they suspect actions are taking place which are not in the principal’s best interest. And often, they are right. The laws which protect privacy often provide good cover for the ne’er-do-wells who abuse their trust and take advantage of an older, more frail principal. The laws protect the privacy of the person who owns the account or property, but the agent takes advantage of that and carries out his or her actions with virtually no oversight. And does so with the imprimatur of the law through the power of attorney document.

            I am working with several other professionals to help address this issue for our clients. I will leave that discussion for another day. Today I want to talk about what to look for if you are aware of a relationship between a principal and agent which you believe may not be kosher. Perhaps the actions are not being taken for the principal. Let me explain. . .

            First and foremost, the agent must be looking out for the best interests of the principal. The actions must always have a direct or indirect benefit for the principal. Suppose Aunt Gertrude (the principal)  appoints her sister Minny (the agent) to be her attorney in fact through the power of attorney document. Minny is continually buying cat food, cat toys and other pet supplies “for Aunt Gertrude,” and you know Aunt Gertrude doesn’t own any cats. It seems fairly clear that these actions, taken by Minny, were not for Aunt Gertrude’s benefit, but for Minny’s benefit. Only it was Aunt Gertrude’s money that was being used.

            Another example: Minny, as the agent using Aunt Gertrude’s checking account, buys an air conditioner for the house where Aunt Gertrude lives, and contracts to have landscaping done as well. Seems okay, right? What if Aunt Gertrude hasn’t lived in the house for months, and Minny’s daughter now lives there and, oh by the way, Aunt Gertrude ‘gave’ the house to Minny who now gave it to her daughter. How? Minny is the agent for Aunt Gertrude, remember? Minny took all of these actions as Aunt Gertrude’s agent through the power of attorney document. So the cat food, the house, the air conditioner and the landscaping were all to benefit whom? Aunt Gertrude doesn’t have a cat and doesn’t live in the house any longer. And this would all be incredible if it weren’t the facts of a case which we have seen, first hand.

            When you are the agent, your duty is to the principal, not anyone else in the family, including yourself. If the principal wants to do something for you, or to give you something, bring in someone else to be part of the transaction, even as a witness. You want to keep everything above board.

            When you know someone who has appointed an agent through a power of attorney, be aware of the actions that agent is taking. Be willing to ask a question now and again. And watch. Just watch. The old adage of ‘if you give them an inch, they’ll take a yard” is often very true in the case of abuse of power of attorney. When an agent finds that he can buy groceries for himself as well as for Aunt Gertrude and no one can tell the difference, he often becomes emboldened. Next it will be a larger purchase. And a larger purchase, and so on. So if you see your friend buying a 54 inch HDTV for his Aunt Gertrude (who you know is blind), you may want to suggest to your friend that he has crossed the line.

            Be sure that all of the actions you take as an agent benefit your principal. Be sure you keep excellent records of all of your actions, your purchases, etc.We'll continue the discussion for the benefit of you, as the principal who has appointed someone as your attorney in fact, as well as those of us who have been appointed the attorney in fact under a Power of Attorney document. Please check back, and share your stories. . .I know that there are lots of stories out there. . .