When the caretaker abuses a power of attorney, the consequences fall on your loved one first and on your loved one’s heirs second: your loved one loses money needed for care, and the estate that would have passed to the family is drained.
A power of attorney hands the agent access to everything the principal owns. Where large sums of money and substantial assets are readily accessible, that access is a temptation, and a caretaker can abuse the power of attorney once the elderly person is physically disabled or mentally incapacitated and can no longer keep watch. If you are dealing with a caretaker who is abusing a power of attorney, or you are a caretaker who has been unjustly accused of it, we can help. Call us at 212-233-1233 or email [email protected].
The document typically authorizes the caretaker to act for your loved one on bank accounts, the purchase and sale of real estate, the management of assets, stock and bond transactions, retirement plans, investments and the disposition of other property. It does not extend to voting, revoking or amending a will, marriage or divorce, or performing personal services under a contract.
A power of attorney stays in effect until your loved one dies, unless it carries an expiration date, and your loved one can revoke it at any time by giving the caretaker written notice (ideally with a copy to you). Abuse of the document by a caretaker is financially and emotionally devastating to the family, who may feel surprised and betrayed by the misconduct, and naming a caretaker as agent is a frequent source of later lawsuits.
What Counts as Power of Attorney Abuse
Abuse takes a handful of recurring forms. The common thread is that the agent uses your loved one’s authority for the agent’s own benefit rather than your loved one’s.
| Type of abuse | What it looks like |
|---|---|
| Redirecting accounts | Opening joint bank accounts in your loved one’s name and naming the caretaker as co-owner with right of survivorship or as beneficiary, so the balance passes to the caretaker at death outside the will. |
| Life insurance | Buying life insurance on your loved one’s life with the caretaker as beneficiary, or changing the beneficiaries on existing policies. |
| Real estate | Buying real estate with your loved one’s money and putting title in the caretaker’s name or otherwise for the caretaker’s benefit, or transferring your loved one’s existing property. |
| Unauthorized gifts | Gifts to the caretaker personally that the power of attorney did not authorize. |
| Theft and self-dealing | Outright taking of your loved one’s property, and transactions in which the caretaker is on both sides of the deal. |
| Credit | Unauthorized use of your loved one’s credit cards and opening new credit in your loved one’s name. |
What Can I Do If I Suspect the Caretaker Is Abusing a Power of Attorney?
There are four practical routes, roughly in order of escalation: ask for the money back, have your loved one revoke the document, sue, or seek a guardianship. Which one fits depends mostly on whether your loved one still has capacity and is willing to act.
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Ask the caretaker to return the money or property
This may or may not work, but it costs nothing to ask. Some agents only intended to abuse the power of attorney for as long as they could get away with it. Once discovered, they may decide to cut their losses rather than face a civil lawsuit or a criminal complaint, and simply return the money or property in question.
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Ask your loved one to revoke the power of attorney
The simplest step is to explain to your loved one that the caretaker may be defrauding your loved one, and to ask your loved one to revoke the power of attorney in writing, with a copy to you. Revocation requires that your loved one still have capacity. It is worth following up to make sure the caretaker no longer has authority over any of your loved one’s accounts, which means the banks and other institutions must be told of the revocation.
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Bring a lawsuit against the caretaker
Your loved one can contest the power of attorney in court by suing the caretaker for breach of fiduciary duty, tortious interference or other causes of action, to get the embezzled funds or property returned. These matters are complex and time-consuming, and most people need a litigation attorney to see them through.
The practical difficulty is that your loved one, though entitled to sue, is often too old and frail, lacks the will to fight, or no longer has the mental capacity to bring a lawsuit. Elderly people also tend to feel sorry for the caretaker and do not want the caretaker to get into trouble with the law.
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Obtain a guardianship over your loved one
Where your loved one cannot or will not act, the remaining option is a guardianship proceeding. Once you are appointed guardian, you can bring the lawsuit against the caretaker yourself, on the same grounds of breach of fiduciary duty, tortious interference and related claims, to recover the funds or property for your loved one and ultimately for the estate and its beneficiaries.
The most common downside is that your loved one may resent you for bringing a proceeding that compromises his or her independence. Guardianship cases are also complex and slow, and most people need a New York guardianship attorney to handle them.
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Is abusing a power of attorney criminal? Can the caretaker go to jail for it?
The conduct described above typically amounts to one or more of embezzlement, theft, identity theft, fraud and forgery, all of which are crimes. In practice, though, jail time is unlikely. Your loved one is usually unwilling to press charges against someone close to them, and the police tend to treat power of attorney abuse as a civil matter.
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Can I report the abuse to adult protective services?
Reporting financial abuse of a power of attorney to adult protective services usually produces little, because the agency views it as a civil matter. Your best opportunity to resolve the situation is to retain an attorney with experience in these cases. If other kinds of abuse are also present, such as neglect or physical abuse, you should report those to adult protective services.
How Can I Prove That the Caretaker Is Abusing a Power of Attorney?
The proof is in your loved one’s financial statements and property records. If the caretaker is abusing the power of attorney, the statements will show transfers of money or property to the caretaker, or unexplained cash withdrawals, and the county records will show any deed out of your loved one’s name. Ask your loved one to show you those documents or to give you access to the accounts. If that is not possible, your attorney knows how to obtain them.
How Long a Power of Attorney Stays in Effect
A power of attorney remains in effect until the person who made it dies, until it expires if it carries an expiration date, until your loved one revokes it by giving the caretaker written notice, or until it is successfully contested and revoked by the court.
How Much Does It Cost to Hire a Lawyer for This?
Attorneys generally charge by the hour. In our firm, we charge $600 per hour and require a retainer deposit of $4,000 to start work on a case. No one likes to spend money on lawyers, but if the alternative is your loved one continuing to suffer power of attorney abuse while the future inheritance keeps shrinking, the choice is usually an easy one.
If you are having issues with a caretaker who is abusing a power of attorney, or you are a caretaker being unjustly accused of it, we at the Law Offices of Albert Goodwin can help. Call us at 212-233-1233 or email [email protected].
