Powers of attorney: An essential tool, but one ripe for abuse
This article looks at powers of attorney and why they are so prone to being tools for elder abuse.
The future is impossible to predict and while most people would like to believe that they will remain mentally competent for the rest of their lives, the fact is that many will not. When a person is no longer able to make their own financial and healthcare decisions for themselves, they will need somebody else to make those decisions for them. A durable power of attorney allows people to designate an individual (called an agent) to make those decisions for them in case they one day become incapacitated. However, while powers of attorney are essential estate planning tools, they are, sadly, ripe for abuse.
Powers of attorney and elder abuse
A durable power of attorney gives the designated agent broad powers over the principal’s (the person who made the power of attorney) financial and medical care, including control over bank accounts and the ability to make potentially life-or-death healthcare choices. As a result, a power of attorney agent has considerable power over an individual who is no longer able to make their own decisions.
While most agents take their responsibilities seriously and act in a way that is in accordance with the principal’s best interests, there are other agents who abuse their power. As MarketWatch reports, elder financial abuse costs $2.9 billion annually, with 34 percent of culprits of such abuse being an elderly person’s relative, friend, or neighbor. While not all elder abuse involves powers of attorney, the Government Accountability Office has identified powers of attorney as especially prone to abuse.
Reducing the risk for abuse
The first step in reducing the risk of such abuse happening is by choosing a power of attorney agent who is most likely to follow one’s wishes and best interests. While friends and family members are usually the best candidates for such a position, as the above figures show even close relatives and friends can take advantage of their positions. In addition to choosing somebody who appears trustworthy, it is also important to choose somebody who has few financial problems of their own, such as large debts or bankruptcy issues. A power of attorney agent who is in financial distress is far more likely to take advantage of their access to the principal’s financial accounts.
As CNN points out, a more reliable way of reducing the risk of elder abuse is to instead designate a lawyer or bank as the agent. Such outside parties have little vested interest in abusing their powers of attorney, although they will also need to be compensated for their services, unlike a friend or family member who will often work as an agent for free.
Estate planning law
For those who need help drafting an effective estate plan or who are worried that a loved one may have been the victim of elder abuse, including by a power of attorney agent, it is important to talk to an estate planning and litigation attorney. An experienced attorney can assist clients with all of their estate planning needs, including with ensuring their and their loved ones’ rights and interests are protected and advocated for.