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."