When your loved one’s friend abuses a power of attorney, that can mean serious financial consequences for your loved one’s well being and diminishes your future inheritance. A power of attorney gives your loved one’s friend the authority to make legal and financial decisions for your loved ones regarding such matters as bank accounts, the purchase and sale of real estate and the management, stock and bond transactions, retirement plans, investments and disposition of other assets. The power attorney doesn’t work for things such as voting, revoking or amending a will, divorce or marriage matters or fulfilling personal services under a contract matter.
A friend can be a neighbor, someone your loved one knows from church or other social situation. Sometimes fraudsters target elderly people and befriend them with the intention of defraud them and their heirs of their money. At other times, friends see an opportunity and cannot resist the temptation.
By creating a power of attorney and giving your loved one’s friend such important powers, your loved one exposed themselves to a potential for fraud, self-interest and embezzlement by your loved one’s friend. A situation where large sums of money and substantial assets are involved and readily accessible can create a temptation for your loved one’s friend. Children sometimes abuse their loved ones’ powers of attorney, when the elderly loved one needs elder care and are physically disabled or mentally incapacitated. A financially abusive friend could leave a your loved one’s estate and their heirs without any assets or inheritance.
A power of attorney is in effect until your loved one dies unless there is an expiration limit. Or, your loved one can revoke the power of attorney at any time by giving written notice to your loved one’s friend (hopefully with a copy of the notice to you). Abuses of powers of attorney by a friend can be financially and emotionally devastating to the loved ones, who may feel surprised and betrayed by this misconduct.
Since there is such a huge potential for disagreements and fraudulent acts to arise, creating a power of attorney can lead to potential future lawsuits if loved ones choose the wrong friend as the power of attorney. A loved one should carefully consider which one of their children (if any) should act as their power of attorney. If a loved one does decide to name a child as a power of attorney, they should pick the child who possess traits of trust, honor and integrity.
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How can my friend abuse a power of attorney
• Opening joint bank accounts and naming the friend as a beneficiary or co-owner with right of survivorship
• Purchasing life insurance policies with your loved one as insured and naming the friend as a beneficiary or changing existing life insurance account beneficiaries
• Purchasing real estate with your loved one’s money and transferring title of real estate for the benefit of the friend
• Unauthorized gifting to the friend
• Outright theft by friend of the loved one’s property
• Unauthorized use by friend of credit cards or establishing credit under the loved one’s name
Can my friend go to jail for abusing a power of attorney?
Serious abuses generally involve state and/or federal crimes of embezzlement, theft, identity theft, fraud or forgery, but it is unlikely that your loved one’s friend will face jail time, as your loved one is unlikely to press charges against their child. However, your loved one’s friend can face fines as well as civil litigation and restitution of funds and property to your loved one’s estate and to you as a beneficiary.
What can I do if my friend is abusing a power of attorney?
Although your loved one can revoke the power of attorney that your loved one’s friend is abusing and can sue your loved one’s friend to get the money back, they are often too old and frail and don’t have the will power or sometimes even the mental capacity to bring a lawsuit. They also feel bad for the friend who took the money from them, thinking that they don’t want that child to get into any kind of trouble with the law. One option may be to obtain guardianship over your loved one. Once a guardian, you can bring a lawsuit against your loved one’s friend abusing the power of attorney on grounds that a fiduciary duty was broken, tortuous interference or other causes of action to get the embezzled funds or property returned to the loved one, and ultimately to benefit the estate and beneficiaries. There are some downsides to the guardianship proceeding, the most common downside being that your loved one can resent you for bringing a proceeding which compromises their independence. These matters are complex, time-consuming and most people require the assistance of an experienced New York probate estate litigation attorney to help resolve matters for them in court.
If you wish to speak to a New York estate attorney, call the Law Offices of Albert Goodwin at (212) 233-1233 or (718) 509-9774..