Breach of Power of Attorney

Sometimes, giving someone power of attorney is just as important as having a will.

Senior citizens and others with decreasing ability to make decisions often give an agent power of attorney, or the right to manage finances and make health-care choices. However, those needing a proxy should ensure they choose someone who truly has their best interests in mind, as there is always the potential for neglect when power is at stake.

Abuse

Agents authorized to act on someone's behalf can abuse clients by embezzling, changing the beneficiary on a life-insurance plan, opening joint bank accounts or implementing pay-on-death provisions that serve the agent, to name a few, according to Clark Skatoff PA, a Florida law firm.

Senior Citizens

Senior citizens are particularly exposed to the potential of power-of-attorney abuse due to cognitive decline from natural causes or medications, according to Craig T. Matthews, a litigation lawyer from Dayton, Ohio, writing for Nolo.com. Also, the elderly can experience difficulty understanding changing technologies like the Internet, computers and other innovations that can cause confusion and require another person's help.

Legal Claims

"Breach of fiduciary duty" and "conversion" are two common legal claims involving power-of-attorney abuse. The former occurs if any of the following terms are compromised: the client is not informed of issues in his interest; the agent collects a profit without the client's consent; or the agent transfers the client's property without consent, according to Matthews. The latter involves the agent's change of property ownership from the client to himself, an actionable offense if the client can prove the agent disobeys a demand for returned property, Matthews says.

Damages

A court will order that the agent return stolen property if the client successfully proves breach of fiduciary duty or conversion; it also may require that the agent pay attorney fees. If the defendant's conduct is "particularly egregious" or involves fraud, Matthews says, the court may award punitive damages.

Prevention

The most effective way to prevent power-of-attorney breach is to name an unquestionably trustworthy agent. However, for increased protection you can: require that the agent regularly document all financial transactions; name co-agents--a system of checks and balances when contracts require two signatures; or name a "protector" who can replace an agent if wrongdoing is discovered, according to the "Wall Street Journal."

References

• Clark Skatoff PA: Power of Attorney Abuse
• "Wall Street Journal": How to Ensure Relatives Don't Rip You Off
• Nolo: Elder Financial Abuse--Power of Attorney Scams