The durable power of attorney document is a staple of any estate plan. This valuable document gives another individual, your "agent," the power to make financial decisions on your behalf. Power of attorney abuse is your agent's misuse of the authority you grant them.
Financial Elder Abuse & The Power of Attorney
Financial elder abuse is the illegal or improper use of an older adult's property, assets, or funds. The problem is larger than many people believe. According to the National Council of Aging, approximately one in ten Americans aged 60+ have experienced some form of elder abuse. Estimates of the annual cost of financial elder abuse range from $2.6 billion to $36.5 billion.
Because the durable power of attorney document grants your agent the power to make financial decisions on your behalf, your agent has access to your financial assets, which usually includes access to bank accounts and the ability to sign checks. Your agent owes you a fiduciary duty, meaning they are legally required to act in your best interest. However, a power of attorney is usually not subject to oversight by a court, so if you can no longer monitor your agent's actions, it would become very easy for your agent to steal from you. This is why many elder fraud experts have another name for a power of attorney: "a license to steal."
As you age, you are more susceptible to financial elder abuse by your agent abusing the power of attorney you gave them. Risk factors include:
- Being in poor physical health.
- Having a cognitive impairment.
- Difficulty performing activities of daily living.
- Being socially isolated.
As you age, having a strong network of people around you is a great way to help curb potential power of attorney abuse and financial theft.
How Can I Protect Myself From Power of Attorney Abuse?
Despite its potential pitfalls, the power of attorney document is still an essential piece of an estate plan. Should you become incapacitated without a power of attorney, your family must petition the court for guardianship. The process is costly, lengthy, and there is no guarantee that the court will appoint the same guardian that you would have chosen for yourself.
When drafting a power of attorney, it is crucial that you remember that you get to designate which powers the agent does and does not have. For example, you may decide that you do not want your power of attorney to make gifts on your behalf. This means that the agent cannot gift your home or your car to themselves or their spouse. You could add a level of safeguard by designating a secondary agent responsible for reviewing and agreeing to all actions made by the primary agent.
However, the best advice for creating a successful power of attorney is to designate an agent you trust completely. Once you have made a designation, make sure to revisit the decision every few years. A change in circumstances may impact someone's suitability for the role of agent. For example, a family member might no longer be suitable for the role if they have fallen into a lot of credit card debt or have encountered other financial hardships.
How Can I Protect My Elderly Loved Ones?
You can protect your loved one by watching for changes in their established financial patterns. You can monitor their bank accounts for suspicious activity, such as large or unexpected withdrawals. You can also watch for potential isolation of your loved one. If someone is trying to isolate your loved one from you, they may be attempting to gain something from your loved one, whether it be money or property.
If you suspect that a loved one's agent is not acting in good faith, you should immediately contact an attorney. It may also be necessary to contact law enforcement, depending on the circumstances.
If you have concerns about a senior that may be the victim of elder abuse, you can find more information on the North Carolina Department of Justice Attorney General's website.
Have Questions & Not Sure What To Do?
If you have additional questions about preventing elder fraud or creating a power of attorney, don't hesitate to contact Carolina Family Estate Planning at 919-899-2606 for a free assessment by phone or schedule a free case assessment online. Our experienced team of elder law attorneys is here to help!