Power of Attorney Abuse
It is an unfortunate fact of life that the most damaging financial elder abuse is often committed by a person the victim knows and trusts, and in some cases, that person has power of attorney. It goes without saying that seniors should only grant power of attorney to people they trust. However, everyone has weaknesses, and sometimes even trusted individuals can make the wrong decision. When those wrong decisions cause financial harm to seniors, they may cross the line into elder financial exploitation. Our San Francisco financial elder abuse attorneys can help the victims of abuse and their families fight back against the perpetrators of power of attorney abuse.
The Basics of Power of Attorney
A power of attorney is a legal mechanism by which one person (referred to as the “principal”) grants another person (referred to as the “attorney-in-fact”) the authority to act on their behalf. That authority can extend to both financial matters and medical matters. Both forms are statutory forms in California. See Cal. Prob. Code §§ 4401 (durable power of attorney) and 4701 (Advance Health Care Directive Form). One of the most common forms of power of attorney is a “durable power of attorney,” in which the power of attorney relationship continues even if the principal becomes incapacitated. In this way, power of attorney allows elderly individuals (and others) to name someone they trust to handle their affairs when they are no longer able to do so.
The authority granted to attorneys-in-fact can be extensive, and the attorney-in-fact’s actions are afforded the same legal effect as if the principal had undertaken them himself or herself. If the principal expressly elects to grant it, that authority can include the power to:
- Create, modify, revoke, or terminate a trust
- Fund a trust with the principal’s property
- Make or revoke a gift of the principal’s property
- Exercise the right to reject, disclaim, release, or consent to a reduction in, or modification of, a share or payment from an estate, trust, or other fund on behalf of the principal
- Create or change survivorship interests in the principal’s property
- Designate or change the designation of beneficiaries to receive any property, benefit, or contract right upon the principal’s death
- Make a loan to himself or herself
As you can imagine, this power in the wrong hands can cause significant damage. If you suspect that someone is misusing a loved one’s power of attorney is improperly engaging in any of the above activities, you should consider speaking to a San Francisco financial elder abuse attorney.
How Attorneys-in-Fact Can Abuse Their Power
Undue Influence
Most principals choose a close family member as their attorney-in-fact, such as a spouse or adult child. As such, those individuals are in a position to exercise a great deal of authority and influence over their principals, particularly if the principal is suffering from cognitive decline. Undue influence refers to a situation where one person uses their position of authority to overpower another person’s free will so as to cause that person to act or refrain from acting in a way they wouldn’t have otherwise. (See Cal. Welf. & Inst. Code § 15610.70.) Attorneys-in-fact are in a prime position to unduly influence their principals, for example, by convincing them to change their estate documents to the attorney-in-fact’s benefit. Or, perhaps, a person who is not an attorney-in-fact may unduly influence a vulnerable elder into granting them power of attorney.
Embezzlement
Embezzlement is a form of theft that occurs where a person who has been entrusted with money or property unlawfully misappropriates that money or property for their own benefit and to the detriment of the person who entrusted it to them. It is most commonly associated with employees stealing from their employers but is actually much broader than that. While attorneys-in-fact are entitled to reasonable compensation for the services they render to their principals and reimbursement for any costs they incur (Cal. Prob. Code § 4204), “reasonable compensation” can easily cross the line into theft. An attorney-in-fact could embezzle, for example, by using the principal’s money to purchase extravagant gifts for themselves and others. If you are aware of an attorney-in-fact embezzling money from a loved one, please speak to a San Francisco financial elder abuse attorney.
Identity Theft
Attorneys-in-fact typically have extensive access to their principals’ financial accounts and personal identifying information. As such, it is not difficult to imagine a scenario in which an unscrupulous attorney-in-fact uses that information to commit identity theft. For example, assume that an attorney-in-fact wants to open a new line of credit, but their credit is too bad to do so. Instead of simply accepting that fact and moving on, they use their principal’s personal identifying information, including their Social Security number, to open the line of credit.
Breach of Fiduciary Duty
A fiduciary relationship is one in which one person is obligated to act only in the best interest of another person. Given that attorneys-in-fact exercise an extraordinary amount of authority over their principals’ affairs, they are considered fiduciaries by law. In California, an attorney-in-fact’s fiduciary duties include, but are not limited to:
- Acting according to the terms of the power of attorney instrument
- Exercising the standard of care that a reasonably prudent person would exercise when dealing with someone else’s property
- Acting solely in the interest of the principal and avoiding conflicts of interest
- Keeping the principal’s property separate and distinct from other property
- Keeping regular contact with the principal (to the extent practicable)
- Keeping a record of all transactions entered into on behalf of the principal
- Delivering possession and control of the principal’s property to the appropriate parties upon termination of their authority
Attorneys-in-fact who breach these duties may be personally liable for any losses attributable to the breach.
Discuss Your Concerns With a San Francisco Financial Elder Abuse Attorney
Power of attorney abuse, like many forms of financial elder abuse, can be difficult to detect. However, if you think something is wrong, you should act quickly to preserve your loved one’s interests. For more information about power of attorney abuse and your legal options for fighting it, please contact a San Francisco financial elder abuse attorney at the Evans Law Firm, Inc., by using our online contact form or calling 415-441-8669 or toll-free at 1-888-50EVANS (888-503-8267).
