Abuse of Power of Attorney
Those given the power of attorney (POA) to handle another’s financial or healthcare matters are in a position of great responsibility to act in that individual’s best interests. Unfortunately, there are times when these individuals betray trust, through manipulating the other person or using their assets for their own personal gain and not in the best interest of the other person. Because of this, it is important to be able to identify any potential misuse of power in order to ensure that the protected person’s interests are secure.
Types of Power of Attorney
As a legal document, power of attorney authorizes an individual (known as an agent) to act on behalf of the individual creating the document (known as the principal). Oftentimes, the agent is also the legal guardian of the principal. There are several types of powers of attorney, depending on the circumstances and needs of the principal. Below are the most common types of power of attorney:
General – This is when the agent receives authorization to decide on all the aspects of the principles life until they pass away or are incapacitated.
Durable – This is when the POA continues to be in effect even after the individual becomes incapacited.
Limited – The agent’s authorization for POA is limited by the principal in both time and scope.
Springing – The POA goes into effect after a triggering event as defined by the document.
Medical – The POA authorizes the agent to make healthcare decisions for them, especially ones that are life-or-death events.
Financial – The POA gives the agent the power to manage the finances of the principal, which includes taxes, bank accounts and real estate transactions.
It should be noted that even though all powers of attorney documents have expiration dates, they can be revoked at any time for any reason. This means the principal doesn’t need to have a particular reason for termination of a power of attorney document, with the only requirement that they are of sound mind when doing so.
Penalties for Abuse of Power of Attorney
There are a number of different ways in which power of attorney can be abused. When someone accuses another person of POA abuse, it is a legal claim that the agent hasn’t been acting in the principal’s best interest. Typically, this involves theft, fraud, forgery, misappropriation, self-dealing or breach of fiduciary duty.
The most common examples of POA abuse includes the financial abuse of an elderly individual, especially when an agent takes funds from the principal’s account, or sells property for personal profit or transfers that property into their own name. Oftentimes the agent will attempt to give justifications for this abuse of power (such as paying off a debt) however it is never considered to be acceptable and there are legal consequences for abusing the power of attorney.
Agents who abuse their POA can potentially face a host of different civil and criminal charges. The severity of the charges will depend largely on the level of abuse, beginning with a civil lawsuit and possible compensation owed to the principal. In more serious POA abuse situations, this can also include criminal prosecution for embezzlement, fraud or exploitation, which can result not only in damages owed but also prison time for the offender.