For an aging adult, a power of attorney can be a useful document. In the wrong hands, however, it can be a license to steal. If someone is ripping off your elderly loved one, step in and take action before it is too late. People plunder nearly $3 billion a year from elders in America according to the MetLife Study of Elder Financial Abuse. This blog explores what to do, if a power of attorney is making questionable financial choices for your loved one.
If you suspect someone is misusing a power of attorney granted to them by your loved one, you must ask a judge to take action, unless your loved one will revoke the power of attorney. Many seniors are hesitant to confront someone to whom they have given a power of attorney. They trusted the person in the first place, and they may not want to believe that a close friend or relative, or a professional advisor like an accountant, attorney or financial services agent would steal from them.
Your loved one has the authority to revoke the power of attorney as long as she is still legally competent. If she revokes the power of attorney, send a copy of the revocation to the person with the power of attorney. Also send a copy to your loved one’s bank, brokerage offices and all legal and financial agents.
If your loved one is no longer legally competent or is unwilling to take action, you may have to petition the courts to protect him. Financial abuse of the elderly is both a crime and a civil wrong.
Criminal actions: Elder financial abuse is a specific criminal offense in many states, besides the common financial crimes. In states without laws that consider elder financial abuse as a distinct crime, courts can proceed under the standard laws that prohibit stealing, fraud, embezzlement and other financial crimes. Courts can prosecute perpetrators of elder financial abuse and seek restitution, and incarceration and fines. You must contact local law enforcement or your prosecuting attorney (called a district attorney in some states), if you suspect that someone is a victim of elder financial abuse.
Private civil actions: There are many civil remedies available to help your loved one. You can ask a judge to order an equitable accounting or court supervision over the person with the power of attorney or to revoke the power of attorney. A judge can appoint a different person as power of attorney, guardian or conservator, and can require the person who posts a bond.
If you sue a power of attorney who has made inappropriate use of your loved one’s assets through a power of attorney, you can seek these general remedies:
- Compensatory damages
- Punitive damages
How to correct wrongful actions taken by an unethical power of attorney
Sometimes, the damage can be cured with no permanent harm to your loved one, if you take action quickly. Depending on the laws of your state and the facts of your case, the judge may :
- Rescind inappropriate or transactions
- Invalidate documents, deeds or contracts
- Place a constructive trust on improperly taken assets
- Invalidate wills executed after the elder became incapacitated
- Create a substitute will or trust
- Set aside improper gifts
Even if you cannot retrieve your loved one’s assets, you may can make the wrongdoer pay for his crimes. Some states have “slayer statutes” or “disinheritance statutes” that prevent convicted financial abusers from receiving financial benefits when the senior dies.
The laws are different in every state, so talk with a local elder law attorney.
American Bar Association. “Power of Attorney.” (accessed July 19, 2017) https://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning/power_of_attorney.html
American Bar Association. “Frequently Asked Questions (and Answers) About Elder Financial Abuse.” (accessed July 19, 2017) https://www.americanbar.org/content/dam/aba/administrative/real_property_trust_estate/faqs/elder_financial_abuse_faq.authcheckdam.pdf
MarketWatch, Inc. “Power of attorney: It’s easily abused.” (accessed July 19, 2017) http://www.marketwatch.com/story/power-of-attorney-its-easily-abused-2013-03-19
MetLife Mature Market Institute. “The MetLife Study of Elder Financial Abuse: Crimes of Occasion, Desperation, and Predation Against America’s Elders.” (accessed July 19, 2017) https://www.metlife.com/assets/cao/mmi/publications/studies/2011/mmi-elder-financial-abuse.pdf