The problem has now been noticed by the mainstream news outlets. Newspapers as diverse as the Wall Street Journal, which reported extensively on the Brooke Astor case, and the (Nampa) Idaho Press-Tribune. [Note that the Wall Street Journal will require you to sign up and pay for content, but you can read the Journal's suggestions about how to protect against power of attorney abuse at the paper's own site once you have subscribed, or take advantage of a Florida law firm's reprint of the article.] The problem may not really be as new as it appears: a 1994 report by Jonathan Federman and Margaret Z. Reed for the Albany Law School Government Law Center indicates that some observers were publicly calling for revisions in the law of powers of attorney more than a decade ago.
Perhaps those of us laboring in aging vineyards (metaphorically speaking) become unnecessarily cynical about the behavior of others. Perhaps, on the other hand, there is truly an epidemic of abuse and exploitation at the hands of family members, friends and even professionals holding a power of attorney. We are universally inclined to think the latter is more accurate, though there are few studies or statistics to support that widely-held view.
What is to be done about the problem? It is not sufficient to simply stop using powers of attorney. In fact, most elder law attorneys, while warning their clients about the dangers, regularly recommend powers of attorney to clients who want to avoid the expense, indignity and inconvenience of court supervision if and when incapacity strikes. Changes in state laws are mostly unhelpful. Arizona, for example, adopted new provisions requiring witnesses to powers of attorney, and limiting the authority of agents to make gifts with the signer's money. No one even suggests that the frequency of abuse has slowed even a tiny amount as a result of those changes.
One thing that might help slow the trend would be aggressive investigation and prosecution of agents who misuse their powers of attorney. Too often, however, the authorities dismiss exploitation as a "family matter," or as something that ought to be pursued in civil litigation, or as too expensive to ferret out and too difficult to prove in a criminal prosecution.
It is all very well to say (as the law does in most states) that the agent may not use a power of attorney for his or her own benefit. Civil recovery against an exploiter is seldom available, since it is so often committed by individuals without sufficient financial resources to pay their own bills (or support their gambling, drug or alcohol habits). Agents who have abused powers of attorney seldom have the wherewithal to repay misappropriated funds.
So what can an individual do to minimize the risk? A few suggestions might include careful selection of your agent, regular review of that choice, and requiring accountings to be given to another trusted family member or friend. Individuals need to consider carefully before signing any power of attorney.
What can you do to minimize the risk of abuse before you sign a power of attorney? A few ideas we encourage:
Is a living trust better protection for you? Perhaps, but perhaps not. Just as with a power of attorney, one of the principal benefits of a living trust is avoidance of court supervision of your fiduciary. That's the good news. Sadly, it's also the bad news. Without oversight, no one in the court system will be charged with keeping your agent -- or your trustee -- honest.
The bottom line is this: the durable power of attorney is simultaneously the most important and the most dangerous estate planning document most of our clients will sign. You should do what you can to make this terrifically valuable instrument work the way it is intended.
Source: The Health Law Blog
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Although the information above was from USA, many of the warnings and tips are relevant to other countries too. Baby boomers and other older folks who have given a 'power of attorney' or are considering it, should ensure that they take into account the information given above.
Unfortunately, there are so many cases of abuse by power of attorney in the hands of trusted friend or family members.
I am sure that there are also loving family members who 'will never consider such acts'. Often these same people have to care for their aging parent(s) or spouse; in their own time and often, with their own money. To these people: We salute you and understand your stress and difficulties. It is those immoral and unethical individuals who prey on the elderly that we are addressing our outrage. So, please do not get offended. ------- Andrew
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