When the Power Of Attorney Is Used As A Sword Instead Of A Shield

   

      Here is my synopsis of what happened to another “Aunt Gertrude,” but this time,

unfortunately, it is a sad but true example of what I have been writing. Today our paper

reported that it was a great niece.. You may agree with me that there is nothing so “great”

about this niece:

      “A woman stole more than $300,000 from her elderly aunt. In April 2010 the York County

Area Agency on Aging received a complaint that an elderly woman, who resided at the

Brunswick of Longstown personal care home was being financially exploited.”

     Let me just break in here and say “Bravo” for the nursing facility that had the guts to pick up the phone can call the Area Agency on Aging!

     “The elderly woman appointed her great-niece as her Power of Attorney (Her attorney in

fact). With complete financial control of her great aunt’s finances, she allegedly

misappropriated more than $300,000 for her own use. The great niece was arrested

on July 5 and charged with two counts of forgery, one count of theft by unlawful taking,

and one count of theft by deception. She was preliminarily arraigned before Dallastown

Magisterial District Judge Scott Laird and released after posting $25,000 straight bond. A

preliminary hearing is scheduled for Aug. 2 at 9 a.m. The charges listed above are taken

from the allegations in the court papers.”

Taken from Cumberlink.com news.

     The Power of Attorney document is designed to assist those who need a helping hand

with the routine affairs of life. Here, as is too often the case, the niece may have begun with the best intentions, but she soon learned that there was no one watching her. She had absolute

control and there was no automatic oversight built into the document.

     At Mateya Law Firm, we have worked with bankers, other lawyers, accountants, trust

officers,and financial planners to develop a very simple, automatic oversight into each new

power of attorney document we execute. The hope is to keep stories like this from happening to our clients. Please contact us if we can help you or if you have something to share.

Abusing the Power of Attorney Document in Death

           Aunt Gertrude’s power of attorney document grants her niece Milly (the attorney in fact) the power and authority to act for her as long as she (Aunt Gertrude) is still alive. Milly must use her best efforts to care for her Aunt Gertrude (the principal) and only take actions which benefit her. But the fact is the niece Millys of the world don’t always do what is best for their Aunt Gertrudes.
           Could Milly, as the attorney in fact, write a will for Aunt Gertrude which leaves everything to herself? The standard wisdom is “no.” A resounding NO! The whole idea of appointing an attorney in fact is to have a person who is looking out for the best interests of the principal. There is some discussion within the past few years that the Pennsylvania statutes do not forbid the writing of a will by an attorney in fact. There are even some who suggest that the power of attorney authorizes such broad powers that the writing of a will is included.
           The issue can be remedied easily – have the power of attorney document forbid the writing of a will by the attorney in fact. One sentence is all that is necessary.
           This simple step does not stop Niece Milly from waiting until Aunt Gertrude is in a pliable state of mind and then taking her to a new attorney who Gertrude has never met before and having her sign a will that she does not fully understand. Nor does it stop the niece from any of the hundreds of other ways which seniors endure elder abuse, including financial abuse.
           Taking the step of forbidding the attorney in fact to write a will for the principal, however, does close one more loophole.
           Please keep sharing. . . .

Taking Control of Aunt Gertrude’s Estate

           If you have been following our story of Aunt Gertrude and her niece  and attorney-in-fact, Milly, you have heard me spin some real yarns about what Milly has done. Today, let’s look at what could happen after Aunt Gertrude dies.
           Suppose Aunt Gertrude had trusted Milly for years and that for years Milly was trying to do all she could to help her dear Aunt. Then, a few years before Aunt Gertrude passed away, two events happened which changed everyone’s life forever. First, Aunt Gertrude was diagnosed with an incurable disease which would eventually take her life and, in the meantime, would steal her ability to reason and think logically. At the same time, Milly was in an accident which was not life threatening, but impaired her ability to make a living.
           Milly continued serving as Aunt Gertrude’s attorney in fact, even after her accident. But now, Milly realized that Aunt Gertrude didn’t really understand her bank statements any more. She didn’t fully comprehend everything she was reading or listening to. And, Aunt Gertrude had over $400,000 in the bank! Milly, because of her injuries, needed money. Milly concocted an idea, and its effects are still being felt by Aunt Gertrude’s family.
           Milly took Aunt Gertrude to her attorney (ie, to Milly’s attorney, not Aunt Gertrude’s attorney) to execute two documents: A last will and testament and a power of attorney. Milly appointed herself the power of attorney, this time granting herself the power to make gifts to, what do you know, herself with Aunt Gertrude’s money. The Will left all of Aunt Gertrude’s estate and money to, what a coincidence,  herself again!
           Milly spent the next two years systematically caring for Aunt Gertrude’s needs with Aunt Gertrude’s money as well as writing herself checks and depositing them into her own account. When Aunt Gertrude died, there was barely enough left to bury her.
           This may sound like a cheap dime-store detective novel, but it happens every day! If you or someone you know is being cared for by an attorney in fact, commonly referred to as a ‘power of attorney,’ take time to look in on them. Both. The principal (the person being helped) and the agent (the attorney in fact). In most power of attorney documents, there is no oversight built in.

At Mateya Law Firm, we have worked to create an automatic oversight in the power of attorney document. We can help you avoid situations like the dear departed Aunt Gertrude.  Feel free to contact us, we welcome comments and questions.

Power of Attorney: Oversight 2

The problem inherent when appointing someone as your attorney in fact (through the power of attorney document) is oversight. Who is watching the person who you have appointed as your attorney in fact?  And if you are saying “Why, my niece is my ‘power of attorney.’ She would never do anything that would cause me harm.” If you’ve just had this thought, you need to go back to the beginning of this blog and review some of the things that my fictional character “Milly” has done to her “Aunt Gertrude.”

These characters are fictional, but I have personally witnessed everything I have written about in this blog. It’s like the old Dragnet TV show. . .”the names have been changed to protect the innocent.” Real people, usually seniors, have these real problems with the power of attorney document every day.

A simple addition to the generic power of attorney document can create a duty for your attorney in fact to report his or her actions to an independent third party. The advantages are many.

First, if your attorney in fact, let’s use Niece Milly, is purchasing cat food, a cat box, and paying vet bills from Aunt Gertrude’s account as her attorney in fact, and Aunt Gertrude does not own a cat, that’s a problem. When this purchase is reported to the independent third-party, that person will question Milly about the expense and either require her to reimburse Aunt Gertrude or take the appropriate action, including legal action which can be both civil and criminal.

Second, suppose Milly is acting appropriately towards Aunt Gertrude and each of the actions she takes and bills she pays are, indeed, for the benefit of Aunt Gertrude. If she reports to an independent third party, and that person reviews the actions and finds them to be appropriate, Niece Milly now has someone to call on to prove that she has acted appropriately in case anyone accuses her of wrongdoing.

I will explore this subject further in our next post. Thank you to all of you who have been following our blogs. Keep your questions coming, and if I may use your question publicly, please let me know so that I can share the information with everyone.

Power of Attorney Oversight

One of the questions that I get when dealing with the family members of a senior citizen is “how much control do I have, now that I’m the ‘power of attorney’ for Mom?”  First, I usually restrain myself from correcting them: “You’re not Mom’s power of attorney, you’re her ‘Attorney in Fact.’”  Next, I will often ask, “Why do you ask? What is it you wish to do?” I want to be sure that the newly appointed attorney in fact knows that I am interested in what actions they take.

The fact is, the attorney in fact who Mom appoints can do just about anything Mom can do. That is pushing the door wide open.

Can the attorney in fact move Mom from one nursing home to another?  Yes.

Can the attorney in fact cash in all of Mom’s investments? Yes.

Can the attorney in fact pay themselves a hefty fee? The PEF code, section 5609, does permit a reasonable fee, and the meaning of “reasonable” is a discussion for another time. But herein lies the biggest problem of appointing an attorney in fact. Who is there to watch what the attorney in fact is doing with Mom’s money? Unless oversight is built directly into the document requiring the attorney in fact to report to some third party, there is no one watching the attorney in fact.

The answer is simple: create an automatic oversight, right in the document, which requires the attorney in fact to report, at least on an annual basis, to a third party. A simple written recitation is all that is required. The next time, we’ll talk about what the attorney in fact’s recitation is all about, and how it protects both the Principal and the attorney in fact.

Self Help and the Power of Attorney

         I recently heard from clients who I had not seen in about eight years. At that time we had helped them with estate plans. They did not want us to draft anything other than their last will and testament. We always discuss the protective documents (living will, power of attorney, medical directives, etc.) with each estate planning client, but these clients wanted to take care of the other documents themselves. Essentially, they were going to go online, or to a store, to get a form or a ‘document kit’ and fill-in-the-blanks on their own ‘one day soon.’

         One day soon never arrived.

         I met with them at the nursing home where one spouse was convalescing from a near-death event. Now they need these protective documents as quickly as I can draft them. And therein lies the problem. . .

         The Power of Attorney is a document that I compare with insurance. You buy insurance, pay the premiums and make sure your policy is close at hand in case you ever need it.  But you hope you never need it. You should think of the Power of Attorney document in the same way. You prepare for the worst case scenario and then hope it never happens.

         “What if I can’t take care of my own business, pay my own bills, because I am in a hospital bed recovering from an accident? Who will step in for me?” Those are the questions you should ask yourself. Now, before the need arises.

         Self-help forms are fine, and you can fill them out yourself. So long as you know everything I know (and by the way, I’m a lawyer). Without this specialized knowledge of the law, the presumptions in the law, and the duties and obligations of individuals, you may innocently fill in those forms in a way that is not good. In the legal world, we often jokingly refer to such forms and will kits as “The Attorney’s Full Employment Act.”  One lawyer could have been hired to properly execute estate planning documents. Instead, when things go awry because of badly drafted documents, and several beneficiaries think they are ‘entitled’ to a better position in an estate (or to ‘Grandma’s checkbook’), then all of the family members will hire attorneys to fight it out. “The Attorney’s Full Employment Act.

         My clients were fortunate that they were able to call me a second time. Most aren’t that lucky. Most end up wishing they had done the right thing. But it was too late. Don’t make the same mistake. Take care of these very important steps now, ahead of time.

When the Power of Attorney Acts Badly. . .Now What?

        When Aunt Gertrude appointed her niece Milly to be her attorney in fact through the Power of Attorney document, she never dreamed she would have to consider what to do if she suspected her niece was not doing the right thing. “That’s Milly. . .she would never do anything to hurt me,” Aunt Gertrude thought.“Why, I’ve known her since she was born. She’s family” So Aunt Gertrude didn’t ask the attorney if there was any sort of “oversight” built in to the Power of Attorney document they were both signing at the attorney’s office that day. She didn’t think she would need it.

        The truth is, when anyone executes a Power of Attorney document and appoints their niece Milly, their son, or their best friend, they are putting their trust in that person. The attorney in fact does not have a duty to report their actions to anyone, unless the Power of Attorney document they sign has some oversight built into it. And, sadly, the Power of Attorney documents which 99% of us have signed do not have any oversight built into them.

        Here in the Commonwealth of Pennsylvania, we have an “Agent’s acknowledgment” which the attorney in fact or agent is required to sign. It essentially says “I promise to do the right thing.” (That may be a too-loose translation, but you get the idea)[1] The agent, however, is not required to reveal any of his or her actions to anyone.

        At Mateya Law Firm, we have changed that. We have added language which requires the agent to produce a written record of any and all the actions taken on behalf of the principal. The concept is built on the same logic as “good fences make good neighbors.”

       We would be happy to explain to you how a power of attorney document can help you, and how it can help protect against the nefarious “Niece Milly” in your life.

[1] The agent’s acknowledgement requires the agent to act for the benefit of the principal, keep assets of the principal separate from my assets, exercise reasonable caution and prudence, keep a full and accurate record of all actions, receipts, and disbursements on behalf of the principal.