Financial Abuse Through A Power Of Attorney
Allowing another person to legally make decisions for you while you are incapacitated requires a great deal of trust. This is why when most seniors choose to give a person power of attorney over their financial affairs, it is someone they trust and know well. Unfortunately, there are a great number of seniors who are financially abused when they give the power of attorney to a trusted friend or family member.
A power of attorney is a legal document that allows one person, an agent, to act on behalf of another person, the principal, with respect to certain matters outlined in the document. Typically, when a person signs a power of attorney over to another person, the agent is deemed to act in the best interests of the principal. A fiduciary relationship is created where the agent cannot take action that earns him a profit at the expense of the principal, and cannot act outside the authority granted in the power of attorney.
In some cases, when the power of attorney gives the agent broad authority over financial matters, the agent may have the power to close down bank accounts and transfer the money elsewhere, even without the principal’s consent. Some agents take advantage of the principal by signing over the principal’s property to themselves or their accomplices, and taking other actions that are adverse to the interests of the principal. At the end of the day, the principal, who may be incapacitated and unaware of the abuses by the agent, is left destitute.
If the financial abuse is discovered early on, the principal may revoke the power of attorney to stop or limit any further damage to his finances. If the principal is incapacitated, physically or legally, then his family members may have to petition a court before they can act on the principal’s behalf in revoking the power of attorney.
It is possible for the senior to file a lawsuit in an attempt to recover the money through a court action. The principal may be successful in this lawsuit, and may recover some of their lost money. However, the litigation to get the money back may also be expensive, and sometimes there is no money left to be recovered.
Anyone considering signing a power of attorney to allow an agent to take over his financial affairs should always make sure that the person chosen as an agent is a trusted and well known friend or family member. Seniors should not sign over authority over their affairs to another when pressured to do so.
Granting someone else power of attorney is still beneficial despite the risks that can sometimes pose. It is best to sit down with an experienced estate planning attorney and determine what you want out of a power of attorney and what authority you want to give another person, especially when you are incapacitated.
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To discuss how a power of attorney can be useful as you plan for your future, contact the Millhorn Elder Law Planning Group in The Villages, Florida for a consultation today.