What To Do If Power of Attorney (POA) Abused

Abuse of Power of Attorney POAWhat It Means To Have POA (Power of Attorney) Over Another’s Finances

Power of attorney is written authorization which gives one person the legal authority to act for another person. Typically, the authority to act concerns financial affairs like bank accounts and investments.

When one knowingly accepts the responsibility to look after the best interests of another party, a “fiduciary” duty is created in the person taking on the responsibility. A few of the categories of people who enter into fiduciary relationships are trustees, executors, legal guardians, conservators and attorneys. Control over an asset or control of funds is granted to the fiduciary by the POA document. The fiduciary is entrusted to place the interests of the other party – the owner of the assets or funds, or the beneficiary of those assets – ahead of his own interests.

An agent-principal relationship is established between the fiduciary and the owner of the assets. The fiduciary is the agent and the owner of the funds is the principal. Fiduciaries owe two main duties to their principals – a duty of loyalty and a duty of care. Under the duty of loyalty, as mentioned above, a fiduciary must not derive any direct or indirect profit from their position and must avoid conflicts of interest. The duty of care requires that the fiduciary perform his functions with a high level of competence and thoroughness in line with industry standards.

Many elders ask a trusted family member to take on the POA responsibility and this may work well, but sometimes it does not and there is a breach of the POA and also of the fiduciary duty. If you have such a situation or expect that you may, you need to act quickly so that you can prove the breach happened and hopefully recoup your losses or the losses of your loved one.

A Typical Case of Power of Attorney Abuse

An elderly gentleman, Robert, lived alone and had no immediate family. He was injured and it was required that he be hospitalized. He was told he would likely be away from home for weeks and Robert was very concerned about who would pay his bills in his absence. His nephew came to the hospital to visit and offered his help.

The next day the nephew brought a POA form with him to the hospital and asked his uncle to sign. Robert signed. When he returned home, he found that his nephew had closed his bank and investment accounts. His nephew told him he was merely safekeeping the money. It turned out the nephew had transferred his uncle’s money to an accomplice who invested in a mobile home development out-of-state. When Robert sued his nephew, the nephew said his uncle had given him the money as a gift and that the signed Power of Attorney was evidence of the trust the uncle had placed in him.

What Can You Do If This Type of Abuse Happens?

Contact an attorney. The attorney can assist in revoking the Power of Attorney, in demanding the return of any stolen money or property, and, if necessary, help you to file a lawsuit against the person who has abused their power.

The most common legal claims in a case of abuse of POA are “breach of fiduciary duty” and “conversion.” It is also possible for the guilty party to be charged with “embezzlement,” “concealment,” theft, or fraud.

Fidicuary duties created in the agent by signing a POA are:

• Keeping an elder informed of things that affect the elder’s interest;
• Keeping the fiduciary’s money separate from the elder’s and keeping detailed records of all transactions engaged in on the principal’s behalf;
• Gaining a profit only if the elder is informed and consents to the fiduciary’s profit;
• Not acquiring an interest adverse to the elder;
• Not transferring or making a gift of the elder’s money, personal property or real estate to himself or others unless the Power of Attorney specifically confers that power.

If the agent in the POA relationship fails to act in accordance with these duties and in good faith, the agent may be liable for breach of the fiduciary duty and action may be taken against him.

Conversion Liability

If the elder’s assets are used by the agent for his own benefit, the agent may be liable for conversion of the elder’s property. To establish this, it must be shown: the defendant managed or used the elder’s property in a way that was inconsistent with the elder’s rights of ownership. When an agent has used a POA to convert a property it must be shown 1) the elder demanded the return of the property, and 2) the defendant refused to deliver the property to the elder.

In the case of Uncle Robert and his nephew, discussed earlier, the jury awarded the uncle the full amount of the money his nephew had stolen and also awarded him punitive damages, interest and attorneys’ fees.

Power of Attorney abuse can have a serious impact on family relations when the abuser is a family member. If you believe the person given Power Of Attorney for your loved one is trying to manipulate the situation to their own advantage or doing something suspicious, you should contact an attorney who can help you ascertain if your fears are founded. It is possible the person may simply have been negligent, but it is important to investigate what is going on before it is too late to recover stolen funds.

If you wait too long, you may not be able to prove what has transpired. It is possible the same person also holds a health care power of attorney regarding your loved one. They may try to force the elderly person into a home in order to sell the house, for example.

What to watch out for when signing over Power of Attorney:

• Do not grant POA to anyone unless you know the person well and feel you can completely trust them;
• Do not release the POA until it is needed;
• If the POA is needed but you are later able to manage your own affairs, take back the POA;
• If the agent in a POA transfers property into his or her own name, demand in writing that the agent immediately return the assets and render an accounting. You should probably contact an attorney at this point, especially if the agent refuses to return the property.

Dealing with breach of Power of Attorney and fiduciary matters can become very complex and it is possible you will need the services of an attorney to unravel what has transpired. Our lawyers at Slater & Zurz LLP have been working with these types of cases for many years. We offer extensive experience and familiarity with Ohio law on these subjects and working with clients who have had to deal with family members who were trying to take advantage of elderly loved ones.

Please contact us for a free consultation by calling 1-888-467-5105, chat with one of our 24-hour live chat representatives or send us a website message.

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