“With great power comes great responsibility.” This saying holds true not only for superheroes fighting crime but also for individuals chosen to act as someone’s power of attorney. Unfortunately, cases of power of attorney abuse are prevalent, and those who betray the trust placed in them may face severe legal penalties.
Understanding Power of Attorney
A power of attorney is a legal document that grants another person the authority to make financial decisions on your behalf if you become incapacitated. Typically, this person is a sibling, spouse, or child. Agents with a financial power of attorney are bound by a fiduciary duty to act in your best interest. They have the legal authority to access your financial information and make decisions regarding your finances and any real estate you own.
Additionally, there is also a health care power of attorney, which grants an agent the authority to make medical decisions for you, including end-of-life care. This document allows them to provide consent for procedures, surgeries, and even authorize end-of-life care cessation. Some states, such as Arizona, also recognize a durable power of attorney for mental health care, which allows the agent to place you in a psychiatric facility if necessary.
The Potential for Abuse
The power granted by a financial power of attorney carries a considerable risk of elder abuse and financial exploitation. In some cases, agents may be unaware of their responsibilities, while in others, they may deliberately violate their fiduciary duty.
For instance, let’s consider the hypothetical situation of Karen appointing her son, Steven, as her agent with full financial decision-making authority. Steven promptly uses Karen’s bank account to pay her bills and address necessary home repairs. These actions fall well within the scope of his agency.
However, things take a turn for the worse when Steven begins treating his mother’s account as if it were his own. He starts using her money to cover his personal expenses, such as credit card bills, bowling league dues, and even indulges in an extravagant vacation, all without Karen’s knowledge or consent. Steven goes as far as selling Karen’s house, despite her being perfectly capable of living there, and uses the proceeds to purchase himself a luxury yacht. Instead of ensuring Karen’s financial security, he limits her budget, forcing her to survive on meager meals of peanut butter sandwiches. Clearly, these actions far exceed the bounds of his authority.
Legal Consequences for Abuse
Abusing the authority entrusted through a power of attorney can lead to both civil and criminal penalties. Civilly, the agent can be sued for fraudulent conversion of the principal’s money and compelled to provide restitution, including interest, to the principal.
On the criminal side, agents can face charges of fraud, embezzlement, exploitation, and theft at the state or federal level. In Arizona, certain forms of elder abuse are classified as crimes, potentially resulting in a Class 2 felony conviction, carrying a maximum sentence of five years’ imprisonment. Additionally, Arizona’s power of attorney for finances allows for damages up to three times the actual loss or disinheritance if an agent misappropriates funds.
Taking Legal Action
Victims of power of attorney abuse have various legal remedies at their disposal. In addition to pursuing civil claims for the conversion of property, competent individuals can revoke the power of attorney and appoint a new agent. Alternatively, they can seek court intervention, demanding records of financial transactions and the invalidation of unauthorized actions.
If the victim is not legally competent to revoke the power of attorney, a concerned loved one may petition the court for legal conservatorship of the principal’s affairs or request oversight of the current agent’s actions going forward.
It is crucial to exercise caution when selecting a power of attorney agent. Ensuring their trustworthiness and qualification to make significant decisions on your behalf is of paramount importance. Opting against appointing an adult child due to a history of questionable financial choices does not demonstrate a lack of love but rather a prudent decision made in your best interest.
To ensure your needs are met and your authority assignment is properly directed, consider working with an experienced law firm specializing in estate planning and power of attorney documents. Garrity Traina is one such firm that can provide the guidance you need.
Remember, financial abuse and elder abuse are serious matters. If you suspect someone is a victim, you can make an online report to the Arizona Department of Adult Protective Services.
Disclaimer: This article serves for informational purposes only and does not constitute legal advice. For a comprehensive discussion of your estate planning and power of attorney needs, it is advisable to contact Garrity Traina for a free initial consultation.