Written by Jonathan Breeden
A power of attorney (POA) gives another person legal authority to make decisions on someone else’s behalf. But what happens when the person trusted to make financial, legal, or medical decisions abuses their authority?
POA abuse is serious and disproportionately impacts elderly loved ones. Too often, children and grandchildren are left wondering what to do if they suspect someone is abusing a power of attorney. Read on to learn more about POA abuse and what you can legally do to seek justice.
Individuals most likely to suffer from POA abuse are disabled individuals, unsuspecting spouses with a nefarious partner, and the elderly. Taking advantage of access to an older person’s finances is a common form of elder abuse.
According to the FBI, fraud and financial abuse of senior citizens is a $3 billion loss nationwide.
According to the North Carolina Uniform Power of Attorney Act, the person you assign power of attorney (an agent) has a fiduciary obligation regarding financial decisions. The agent has a legal responsibility to make prudent decisions in the same manner as the principal (the person who assigned the POA).
Conversion is taking property and then converting it into income through sale or trade. For example, an agent has the authority to sell the principal’s house. But when the agent keeps the profits of that sale, their actions become unlawful.
An agent commits fraud when they knowingly give false or misleading to the principal for personal financial gain. Any misuse or misrepresentation that does not advance the principal’s economic well-being is often criminal.
Unscrupulous agents can abandon the pretense that they are acting in the principal’s best interests and rob them of everything of value. This theft ranges from using the principal’s credit cards for cash advances to emptying their checking account at the ATM.
The agent has the legal right to make certain decisions for the principal. It can be challenging to determine where this legal right ends and potentially criminal behavior begins.
Although you can revoke a power of attorney, this does nothing to address potential liability or wrongdoing.
If you suspect that the person you entrusted with a POA has violated that trust, it’s best to contact an attorney. North Carolina has specific legal instruments and consequences to address POA abuse.
A lawyer can petition the court to compel the agent to account for all financial transactions.
If a full accounting reveals misappropriation, an attorney can request that the court removes, suspends, or limits the agent’s authority.
You might have legal remedies through a civil lawsuit for losses because of POA abuse. You could recover damages such as:
Some POA abuses are criminal. The American Bar Association’s Commission on Law and Aging states several instances in which an agent may be criminally accountable:
A power of attorney is a valuable legal tool. Should you become incapacitated, it allows you to dictate your medical and financial wishes. But when its authority is misused, innocent people suffer.
Here are steps you can take to help protect against abuses when preparing a POA.
You can create a POA that only grants specific powers to an agent. You minimize your legal and financial risk with a carefully parsed document.
Depending on your situation, you might want to limit the time that a POA is valid. A typical expiration date for a durable POA is one to three years.
List three of the most trustworthy individuals you know. Meet with them and discuss your needs. Then, ask what they would do in a few hypothetical situations. The ideal agent will act as closely to your own choice as possible.
If you suspect POA abuse or want to establish a power of attorney yourself, it’s best to consult a lawyer. In North Carolina, attorney Jonathan Breeden has over 20 years of experience helping individuals and families with power of attorney issues and wills. His compassionate and knowledgeable guidance can help you avoid POA abuse for yourself or a loved one.
Contact us online or call (919) 661-4970 to schedule an initial consultation.