Power of Attorney can victimize elderly

Power of attorney can victimize elderly
Agents can write checks, sell seniors' property
By Sandra BlockUSA TODAY

Vulnerable senior citizens are increasingly losing their life savings to unscrupulous individuals who have power of attorney over their finances, the AARP says in a report set to be released today.
By giving a spouse, adult child or other individual power of attorney, seniors can ensure that someone will manage their affairs if they become incapacitated. The individual who has power of attorney — known as the agent — can do everything from writing checks to selling property. But because most states lack adequate safeguards, those broad powers give dishonest agents a license to steal, says Naomi Karp, strategic policy adviser for the AARP Public Policy Institute.
National statistics aren't available, but adult protective services agencies are reporting a sharp rise in financial exploitation cases involving power of attorney, the AARP report says.
The economic downturn could lead to more abuses, says Sarah Prout, an attorney for Lakeshore Legal Aid in Port Huron, Mich., "because people are looking for new sources of money."
Prout says her office has seen an increase in power of attorney cases in the past six months. One of her clients is a 67-year-old woman who tried unsuccessfully to evict her daughter from her home after her daughter assaulted her. The client learned that her daughter, who had been granted power of attorney while she was in the hospital, had transferred the property to her name. To protect herself, the woman moved into a shelter for victims of domestic violence.
Prout's client has since obtained a restraining order against her daughter and returned home. But because her daughter still co-owns the property, the woman can't sell or borrow against the home she's owned for 47 years, Prout says.
Power of attorney is governed by state law, and state protections vary greatly, the AARP report says. AARP is urging states to adopt a uniform law that would, among other things, require that a power of attorney document clearly state the agent's duties, including the individual's responsibility to act in good faith. It would also make agents who abuse their powers liable for damages.
New Mexico and Idaho have enacted the law, and 12 states are considering adopting it in 2009.
While power of attorney is a valuable estate-planning tool, seniors need to exercise caution before giving anyone authority to manage their finances, says Lori Stiegel, associate staff director for the American Bar Association Commission on Law and Aging.
"Nobody ever wants to think their child or spouse will exploit them," she says. "But it happens."

Next Steps: Plan ahead when you have no family

Q: I have a concern that might affect other people in the same situation. I have asked clergy, lawyers and financial advisers, but no one seems to have an answer.
I am a single retired woman with no living relatives. I have never been married. Although I have quite a few documents in place -- a will, a durable medical power of attorney and a durable financial power of attorney that gives a friend authority over my financial affairs if I become incapacitated, I still do not feel comfortable. If I end up in an assisted-living or nursing facility or am unable to fully care for myself at home, how do I find someone who will be my advocate, my friend and my companion? I have friends now, but I certainly do not expect them to change their lives to look after me. Besides, they might not be around. I want to have someone -- similar to family -- who will look out for my welfare and make sure that I am well-fed, dressed in clean clothes, get out when I can, etc. How do I arrange for this? Can you get me headed in the right direction?
A: You are correct when you say that many people do not have family members available to assist them with quality-of-life concerns when they become incapacitated or need assistance with certain activities of daily life. At these times, in addition to basic care, companionship and caring, human contacts are essential to reduce the isolation and loneliness that many seniors face.
We have several suggestions: Seek out a geriatric-care manager who would be retained by either you or your attorney-in-fact, should you become incapacitated or need assistance. The role of the care manager would be to not only evaluate your situation and help you find community and private resources to assist you, but also to conduct ongoing visits to assure that your plan of care is being followed. In appropriate situations, care managers can even help locate and monitor live-in companions. Your power of attorney should specifically include instructions to your agent to hire and use a qualified geriatric-care manager, who can be located in your area by going to http://www.caremanager.org/.
Since companionship and nonmedical assistance -- such as household chores, meal preparation, shopping, entertainment, reading -- are essential ingredients to allowing some people to stay at home longer or to make the most of an institutional setting, we suggest the use of companion services. While there are others, the company that appears to have the greatest national reach is Home Instead (http://www.homeinstead.com/). These nonmedical caregivers have passed criminal background checks, and they are bonded, insured and supervised. These services can be for either short- or long-term situations. You may also look for local firms, but check them out thoroughly.
With these resources in mind, you should revisit your documents, particularly your durable power of attorney, to assure that, should you become incapacitated, your attorney-in-fact is authorized -- or even mandated -- to hire these resources to assist you. Remember: Powers of attorney should be drafted by knowledgeable lawyers who understand your needs and desires and should not be form documents that may or may not pass muster when you need them. You should also consider appointing alternate agents just in case your friend who has agreed to help you is not available. And look into long-term care insurance, as more and more policies today are including geriatric-care management as a covered expense.

November 4, 2008, By: Jan Warner & Jan Collins, Economic Review