What is Abuse of a Power of Attorney?

Choosing someone to act as your Power of Attorney is an important decision. The individual you name as your Power of Attorney is authorized to transact business on your behalf. While having a Power of Attorney is an important part of a comprehensive estate plan, choosing the wrong person can have disastrous consequences, as they might take advantage of you or make decisions that are not in your best interests.

Key Takeaways

• A Power of Attorney is a common estate planning tool that authorizes someone to act on behalf of an individual who is unavailable or incapable of making certain decisions on their own.
• A Power of Attorney grants the named individual broad authority to perform financial transactions, pay bills, sell property, and more.
• Abuse of a Power of Attorney occurs when someone uses their authority to steal money or property or make transactions that are not in the principal’s best interests.
• You can prevent abuse of a Power of Attorney by choosing someone you trust implicitly, and by limiting the scope of their authority.

What Is a Power of Attorney?

A Power of Attorney is a legal document that authorizes another person (the “agent”) to act on your behalf if you are unavailable or incapable of making certain decisions on your own. The agent assumes a fiduciary duty to act in the best interests of the individual who nominated them (the “principal”).

Powers of Attorney are among the most common legal instruments used in estate planning. They are particularly useful to protect older adults and individuals with disabilities whose physical or mental limitations prevent them from acting independently. Unfortunately, some individuals nominated as a Power of Attorney abuse and betray that trust and convert the principal’s assets or other property for their own personal use or benefit.

How Long Does a Power of Attorney Last?

Once someone is granted a Power of Attorney, their authority to act lasts until one of the following occurs:

• The principal dies
• The principal revokes the Power of Attorney in writing
• In cases of a limited Power of Attorney, when the purpose for which the authority was granted has been completed
• The date of expiration of the Power of Attorney, if one was included in the document that granted the agent the authority to act

What Is Abuse of a Power of Attorney?

Abuse of a Power of Attorney occurs when an agent uses their authority to steal money or property or make transactions that are not in the principal’s best interests.

A Power of Attorney grants the agent broad authority to act on the principal’s behalf. They can perform financial transactions, pay bills, sell property, and more. The specific acts the agent can perform are identified in the Power of Attorney document. Unfortunately, a dishonest agent may take advantage of their position of trust and use the Power of Attorney for their own benefit.

Examples of abuse of a Power of Attorney include:

• Stealing the principal’s money or property and using it for the agent’s benefit
• Making unauthorized transactions or transactions that are not in the principal’s best interests
• Ignoring the principal’s best interests by failing to pay bills or refusing to follow the instructions in the Power of Attorney document

Is Abuse of a Power of Attorney a Crime?

Abuse of a Power of Attorney can be a criminal offense, particularly when the agent uses their authority to steal from the principal, commits fraud, or acts against the principal’s best interests. Depending on how the Power of Attorney was abused, criminal charges could include elder abuse, embezzlement, fraud, theft, forgery, or financial exploitation.

Abuse of a Power of Attorney is often handled as a civil matter in which the principal seeks to recover assets. Egregious cases may be prosecuted as a criminal offense.

How to Prevent Abuse of a Power of Attorney

The best way to prevent abuse of a Power of Attorney is by choosing someone you trust implicitly and without reservation to serve as your Power of Attorney.

You can also protect yourself by limiting the scope of the agent’s authority, such as:

• Preventing them from changing beneficiary designations on insurance or retirement accounts
• Creating a right of survivorship on accounts to which the agent’s name is added
• Preventing them from conducting certain transactions, like mortgaging property or incurring large debts

Some Power of Attorney documents require that the agent maintain detailed written records of all actions taken on behalf of the principal. The principal can also empower a third party to revoke the agent’s authority if the agent fails to comply with the requirements outlined in the document, or include monitoring provisions to prevent abuse of a Power of Attorney, breach of fiduciary duty, or other inappropriate actions by the agent.

What To Do If You Suspect Abuse of a Power of Attorney

If you suspect an agent is abusing their authority and not acting in the best interests of the principal, you can:

• Report the suspected activity to the police
• Contact Adult Protective Services and ask them to investigate potential elder financial abuse
• Contact an attorney to help revoke the Power of Attorney and seek to recover the stolen assets

Contact the Vander Laan Law Firm for Comprehensive Estate Planning Services

Natalia Vander Laan is an estate planning attorney in Nevada who serves clients from her offices in Minden and Carson City. She proudly works with individuals and families throughout Douglas County, Carson City, and Lyon County. Discover what makes her approach to estate planning unique. Then call (775) 461-2897 or contact our law office today to schedule a free consultation to discuss your needs and how Natalia can help.