The misuse of a Power of Attorney (POA) poses a significant risk, particularly for vulnerable individuals such as those with disabilities, cognitive decline, or aging-related issues. While many individuals believe that a POA provides security, without proper safeguards, it can lead to financial exploitation and even legal disputes.

Recently, the Coalition for Independent Living Options (CILO) hosted a Lunch & Learn session on Legal Aid: Guardianship vs. Guardian Advocate vs. Power of Attorney. The presentation is available below.

I was surprised to learn that a POA is often considered the most misused document because it grants substantial legal authority to another person to manage the principal’s finances and affairs. This authority can be easily abused if not carefully drafted or monitored, allowing the appointed agent to make decisions that are not in the principal’s best interests. This can potentially lead to financial exploitation or mismanagement of assets.

Reasons for the susceptibility of POAs to misuse include:

• Lack of Oversight: Unlike a guardianship, where a court oversees decisions, a POA often operates with minimal supervision, leaving room for the agent to act without accountability.
• Broad Powers: A poorly drafted POA may grant excessive authority to the agent, allowing them to make significant financial decisions without clear limitations.
• Vulnerable Individuals: People who are elderly, incapacitated, or experiencing cognitive decline are particularly susceptible to abuse by an appointed agent under a POA.
• Financial Exploitation: The most common form of POA abuse is financial exploitation, where the agent misuses the principal’s funds for their own personal gain.

Examples of POA misuse include:

• Withdrawing large sums of money from the principal’s bank account without authorization.
• Selling the principal’s property without their consent and pocketing the proceeds.
• Making unauthorized gifts or donations using the principal’s assets.
• Failing to pay necessary bills or manage the principal’s finances properly.

Mitigating the Misuse of Power of Attorney (POA):

• Legal Consultation: Ensure that your POA is drafted by a legal professional to clearly outline the agent’s powers and limitations.
• Selecting a Reliable Agent: Choose an agent with a strong understanding of your financial situation and a commitment to acting in your best interests.
• Regular Review and Monitoring: Periodically review and monitor the agent’s activities and financial transactions to detect any potential abuse.
• Consider a Durable Power of Attorney (DPOA): A DPOA remains valid even if the principal becomes incapacitated.

Story by Debbie Jenkins