Using Powers of Attorney To Prevent Elder Abuse

Preventing elder abuse can begin with prudent estate planning while the elder is competent.

More than twenty percent of seniors nationwide have fallen victim to financial abuse, according to the National Center on Elder Abuse Bureau of Justice Statistics. Sadly, family members are the perpetrators in ninety percent of cases of elder abuse and neglect. Adult children commit most of the abuse, followed by other family members and spouses. Women are twice as likely to be victims. Not all abuse is strictly financial – the U.S. Department of Justice reports that forty-two percent of murder victims over age 60 are killed by their children, while twenty-four percent are killed by their spouses. Probate and criminal courts throughout California are facing an increasing caseload dealing with elder abuse.

Creating a carefully worded power of attorney for financial affairs is an important first step in preventing financial elder abuse. Paradoxically, these documents are often the instrument of financial elder abuse by family members. For example, once a senior — the “principal” — signs a power of attorney, it generally takes effect immediately, which gives the agent immediate access to the principal’s money.

Fortunately, seniors and their attorneys can use effective safeguards to prevent elder abuse via misuse of powers of attorney:

  • Pick someone completely trustworthy as the agent who already has a proven track record managing money. Often family members simply pick a favorite son or daughter who may be attentive and kind, but without the necessary skill to manage someone else’s money.
  • Consider creating a “springing” power of attorney that only goes into effect after the principal is incapacitated as evidenced by one or more physicians. That ensures that the power of attorney cannot be abused while the principal is fully functional. Many practitioners disfavor “springing” powers because physicians may be reluctant to write a letter regarding a patient’s incapacity, as doing so requires disclosing confidential medical information to banks and financial institutions. Moreover, without additional safeguards, the incapacitated senior is still vulnerable to the misuse of the power of attorney.
  • Consider not releasing the power of attorney until it is needed. Keep the signed power in the attorney’s office.
  • Narrowly tailor the power of attorney to include only necessary powers, and consider requiring two individuals to serve as attorneys in fact. One agent could have authority to write checks up to a certain dollar amount, but both agents’ signature could be required above that limit.
  • Require the agent to provide monthly or yearly accounting to the principal, other family members, or to the principal’s attorney.
  • Keep it current. Avoid pushback from banks or financial institutions by renewing a power of attorney every year. This regular contact with the attorney helps to ensure that the principal is still capable and free of undue influence.

Attorneys in fact must understand their duties and responsibilities to the principal, as well any limitations. Unfortunately, while pre-printed powers of attorney purchased on the internet or at a stationery store must include a “Notice to Person Accepting Appointment as Attorney in Fact” outlining the duties involved acknowledged by the attorney in fact’s signature, there is no such requirement for attorney drafted powers of attorney (Probate Code §4128). It is essential that an attorney drafting a power of attorney provide the attorney in fact with a clearly written set of instructions in “non-legalese” that helps them understand their duties as a fiduciary. These are some of the key concepts the attorney in fact must understand:

  • An attorney in fact has no duty to exercise their authority regardless of whether the principal is incapacitated unless he or she has expressly agreed in writing to act (Probate Code §4230). In the face of potential elder abuse by others, the attorney in fact may be reluctant to act because of personal inconvenience, or may believe someone else is better suited to handle the problem. Furthermore, if the attorney in fact acts in one circumstance, he or she is not duty bound to act in a subsequent transaction.
  • An attorney in fact is bound to a standard of care that would be observed by a similarly situated prudent person dealing with the property of another (Probate Code §4231). A breach of the standard of care may result in the attorney in fact liable for twice the value of the value of the misdeed including reasonable attorneys’ fees and costs.
  • While the attorney in fact only owes a duty to the principal including a duty to keep regular contact, and to communicate with the principal, any interested person upon court order can examine the records of the attorney in fact (Probate Code §4236). A duty to account to the principal may be imposed upon the attorney in fact by the principal, upon request of the conservator, or the principal’s successor in interest after death.

Finally, common sense and good practice dictate that a power of attorney should not be kept a secret. While the original document may still be kept under lock and key at the attorneys’ office, family members should be made aware of who has been selected as an attorney in fact, when that power becomes effective, and the limitations on the powers granted. Financial elder abuse is best prevented through carefully written and understood powers of attorney, and when family members keep each other accountable.

Jack Osborn

Jack B. Osborn is a Partner with Brown White & Osborn LLP and his practice focuses on probate. He is currently the President of the San Bernardino County Bar Association as well as the Chair-Elect of the Conference of California Bar Associations. Mr. Osborn is frequently called as an expert before the California legislature on proposed probate legislation.
Jack Osborn