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Time to Update Your Power of Attorney?

On Behalf of | Sep 16, 2016 | Estate Planning

We have all heard of scams that target elders in our community.

There are several types of scams focused on cheating vulnerable people out of money.  They include:

  • Phone calls that state that the elder has just won the lottery and needs to pay taxes before receiving their earnings.
  • Others say that a beautiful girl 50 years younger is interested in having a relationship.
  • Some simply state that the person on the other end of the line is in dire need of financial assistance.

In recent years, a more disturbing trend in elder abuse has emerged that involves the misuse of powers of attorneys, and for many the culprits are much closer to home.

Powers of attorney give written authorization to a person to legally act on another’s behalf, generally for financial and medical decision making.

Many powers of attorney that are drafted today are durable powers of attorney, meaning that they are indefinitely good and last, even though the person granting the power may later be declared to be incompetent.  General powers of attorney give the agent (the person holding the power) the ability to manage the elder’s finances – write checks, transfer money, open and close accounts, and make investments.

A Typical Pattern of Abuse:

This may involve an elderly family member giving power of attorney to a trusted son or daughter, niece or nephew.  That person then takes the power of attorney and uses it to raid the elder’s checking account or other assets.  That person may change real estate property titles to their own names or sell investments and pocket the proceeds.  This type of abuse is most common when the elder or grantor of the power of attorney is not in good physical or mental health.

Prevention Techniques:

We advise clients to be aware of issues such as these and make sure that they completely trust the person to which they are giving their power of attorney.  Sometimes elders should consider keeping these powers of attorneys at their attorney’s office or other safe location and provide them to their agents only when needed.  Once the power is no longer needed, the elder should retrieve the power of attorney and return it to the safe location.

Another Common Pattern of Abuse:

A dishonest person will use an older power of attorney that has been revoked by the elder.  The person will present the revoked document to a bank and demand that assets of the elder be handed over to them.  After all, the document was signed by the elder and looks authentic.  The bank does not know that the power of attorney has been revoked, so they readily give the money to the person.

Combat this Abuse:

To combat such abuse and fraud, many banks will not accept a power of attorney that is much older than 5 to 10 years.  As such, we advise clients to “refresh” or update their durable powers of attorney every 5 years to avoid any issues with the bank.  Another step you should take to protect yourself from fraud and abuse is to file any revocation of your powers of attorney with the Register of Deeds Office .  By doing so, the revocations are filed publicly and can be readily accessed and checked by banks and financial institutions when presented by an agent.

The details surrounding power of attorney can be complicated, but there is no need to be overwhelmed. Contact one of our estate planning attorneys to assist you further with updating your powers of attorney or to answer any questions you have regarding abuse of powers of attorney. With offices in Clarksville and Springfield , TN, the legal team at Batson Nolan, PLC is here to help you navigate these tricky waters!