Consider inheritance hijacking and fraud issues before empowering agents to take care of your elder loved one’s finances.
Some say giving the wrong agent power of attorney (POA) is like offering them a license to steal.
Both durable and nondurable powers of attorney are supposed to enable a trusted fiduciary to conduct careful and loyal financial decisions for your elderly, disabled, or incapacitated loved one.
But working families in Iowa today are dealing with the challenges and obstacles that frequently accompany POA authority, consulting with us more and more each day to learn why power of attorney abuse happens and how they can prevent it.
Elder Financial Abuse Activity Rises Nationally
As people grow older, they may have to rely and depend on a POA agent to run their lives.
Power of attorney authority accordingly offers enormous control over the principal’s finances and real property and with such power sometimes arises the opportunity to participate in elder financial abuse or fraud.
According to the latest Senate Special Committee on Aging report, older American citizens lose billions annually from fraud and financial scams, and lawmakers expect this practice to continue into the next decade—power of attorney abuse likewise lays down its awful head in this shocking trend.
Government statistics also inform us relatives, siblings, spouses and close friends took part in over thirty percent of elder financial abuse cases reviewed—statistics that show us POA abusers may be closer to your elder loved one than you think.
“Older Americans lose approximately $3 billion to an ever-growing number of financial scams.”
– Senate Aging Committee
Limiting Power of Attorney Authority
Most power of attorney agents in Iowa are managing their principal’s financial affairs carefully and loyally because well practiced estate planning lawyers are helping their clients screen potential agent candidates before including powers of attorney as part of their estate plans.
Law firms nowadays further design power of attorney documents so that everyone can recognize them (i.e. out-of-state renters and interstate lenders).
But despite all the meticulous planning to prevent abuse, more elders are assigning durable powers of attorney to agents, allowing fiduciaries to continue holding unlimited POA authority when the elder becomes mentally incompetent or incapacitated.
Our power of attorney abuse lawyers contrarily believe you should consider assigning general powers of attorney to agents that limit their authority to manage only certain activities (real estate transactions, grocery shopping), especially when your elder loved one has lost capacity.
The attorneys at the Smith Law Firm for example can customize power of attorney documents to fit each client’s unique circumstances. We craft POA provisions that add protections like forbiddance of agents to gift estate property to others or requiring an independent second agent to review large payments or purchases against the estate.
“Customize your power of attorney documents to prevent abuse from taking place.”
– Smith Law of Iowa
Lack of Court Oversight Promotes Power of Attorney Abuse
A properly executed power of attorney will nullify an older POA document if its provisions refer to the same principal.
Iowa courts also do not monitor power of attorney documentation—any scammer can go online, print a POA form, and take it to your incapacitated elder to execute—a practice that makes authentic POA authority vulnerable.
Some notary publics and POA witnesses even collude with scammers when executing unauthorized documents, making it even tougher for you to realize when an elder revokes and replaces his or her old power of attorney with a new one.
Eliminating Power of Attorney Authority Due to Incapacity
If a principal lacked the mental state to execute their power of attorney, you can ask your estate planning advocate to open lack of testamentary capacity proceedings and fiduciary litigation to expedite the agent’s removal.
The courts will determine whether your loved one understood what was happening when he or she assigned the power of attorney—opening the door to holding a wrongdoer personally liable for breaching their fiduciary duties owed the principal.
Preventing Power of Attorney Abuse from Happening
Smith Law in Iowa recognizes that most agents do not start out abusing their powers of attorney. Wrongdoings often emerge when a fiduciary’s personal economic situation changes or when he or she carelessly overreaches their authority and damages the assets of the people they represent.
Detecting power of attorney abuse is therefore tricky; you can however take steps to protect your elder loved one from an agent’s fraud, embezzlement or undue influence and mitigate harm to the estate from POA misuse.
- Locate a Trusted Agent
You must first and foremost find and appoint a trustworthy agent and revisit your choice every couple of years.Many times an agent may seem like the ideal candidate, but this assumption may change if the fiduciary suddenly experiences financial troubles in his or her personal life. - Notify Financial Institutions
Once you’ve established power of attorney authority in someone, produce a writing that informs the principal’s bank, credit card lenders, mortgage holder, renters or any other payor about the POA assignment and ask them to alert the estate if any sudden changes arise in the principal’s account moving forward.Doing so will preempt power of attorney abuse and show institutions that you’re willing to take part in supervising your loved ones financial responsibilities. - Monitor All Accounts
Even if some financial institutions refuse to forewarn you, make good faith attempts to watch all accounts as soon your loved one has become incapacitated.Look for any suspicious activity or ask the three credit bureaus to suspend the elder’s credit report so that no one can get a credit reference when attempting to borrow money against his or her name. You can always unfreeze the principal’s credit access if the agent legitimately needs to borrow for the principal. - Inventory Property to Prevent Inheritance Hijackings
Inheritance hijacking of valuables arises when unethical power of attorney agents unlawfully transfer the principal’s title ownership of personal property to their own estate.Cash is often easy to embezzle and troublesome to monitor, but valuable items like art, jewelry, family heirlooms and antiques can be tough to convert to cash if the agent knows you have taken a full inventory of the principal’s valuable items before he or she assumed the POA position.A power of attorney abuse lawyer can prepare an estate accounting inventory for you and have your agent sign off on the report, making him or her personally liable if valuables become missing because of a negligent performance or an intentional wrongdoing. - Immediately Sue to Remove Agents
Upon discovery of power of attorney abuse, don’t wait to pull agents from their positions, or worse, leave them there believing that they’ll soon correct their behavior.Retain a power of abuse removal attorney quickly after discovering POA misue and file suit to discharge the agent. You may also consider agent dismissal for lack of testamentary capacity if it’s relevant.
Smith law of Iowa can obtain an immediate temporary injunction that legally suspends the agent’s authority until the courts resolve the principal’s incapacity question.
Your power of attorney abuse lawyer may also provide notice of the agent’s suspension to the principal’s lenders and accounts receivable payors.
No one wants to accuse people of negligent wrongdoings but protecting your elder loved one from power of attorney abuse should always come first—preventive action not only safeguards the estate from looting, but also saves you the headache of pursuing expensive estate dispute litigation or tortious interference of inheritance lawsuits down the road.