Abuse of Power of Attorney

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A power of attorney designation can give an agent great power over the assets and financial affairs of the person who creates it. Sometimes, that power can be abused. Understanding the limits of this estate planning form can help you recognize, prove, and protect your loved one against abuse of the power of attorney authority, even within your own family.

What Authority Does a Power of Attorney Holder Have?

A power of attorney is a legal document delegating a person’s authority to manage their financial and some legal affairs. The “principal” signs the document naming a specific person (or persons) as their agent with the authority to act on their behalf.

A power of attorney can give the named person broad authority to act on the principal’s behalf, but it can also be limited by:

  • Time
  • Types of transactions
  • Context

Powers of attorney can be useful for everything from aging parents delegating everyday financial maintenance to their children to students studying abroad who need someone back home to make sure the bills get paid while they are away.

Florida recognizes the risk of financial elder abuse through power of attorney authority. Under Florida law, certain power of attorney actions are considered “super powers” such as the power to form or modify a trust or make gifts on the principal’s behalf. While the elder, or the principal, is allowed to delegate “super powers,” he or she must do so individually, and sign or initial each grant of “super power authority.”

Duties of a Power of Attorney Agent

The agent named in a power of attorney must agree to serve in the role. Under Florida law, once he or she accepts the appointment, the agent becomes a fiduciary of the principal, regardless of the language of the form. Like other fiduciaries, the agent:

  • Must act only within the scope of authority granted in the power of attorney.
  • May not act contrary to the principal’s reasonable expectations (if actually known by the agent)
  • Must act in good faith
  • May not act contrary to the principal’s best interest (except in certain cases)
  • Must attempt to preserve the principal’s estate plan, to the extent known, if doing so is in the principal’s best interest
  • May not delegate his or her authority to third persons (except in certain circumstances)
  • Must keep records of all transactions made on the principal’s behalf
  • Must create and maintain an inventory of any safe-deposit box
  • Shall act loyal to the principal
  • Shall not create a conflict of interest or act impartially
  • Shall act with care, competence, and ordinary diligence
  • Shall cooperate with the principal’s health care advocate

Detecting Abuse of the Power of Attorney

One of the most common uses for a power of attorney is a durable power of attorney created as part of a person’s estate plan. This power of attorney authorizes the agent to carry on the principal’s affairs after the principal is physically or mentally incapable of doing it themselves. Often, a parent will sign this kind of power of attorney delegating authority to their children. However, this creates a risk of one sibling abusing power of attorney authority.

So how can you tell if your sibling is abusing their power of attorney authority (including any super powers)? One of the first signs is “self-dealing.” A power of attorney in Florida is a fiduciary of the principal. That means that the agent should not directly benefit from the exercise of his or her authority, and should be placing the principal’s needs above their own. If your sibling or relative seems to be disproportionately benefiting from the use of your loved one’s money, it could be a sign they are abusing their power of attorney authority. Additionally, the cause of action associated with power of attorney abuse would often be called breach of fiduciary duty.

How Do You Prove Abuse of the Power of Attorney?

When a power of attorney is misused, it can cost your loved one thousands of dollars and sometimes deprive them of care and support they desperately need. If you believe a sibling or other agent is abusing their power, you can file a lawsuit in Florida probate court for power of attorney abuse. It will then be up to you to prove that the agent violated his or her fiduciary duty to the principal, or acted outside the scope of his or her authority. Often, this requires hiring a forensic accountant to trace the funds being withdrawn from your loved one’s account. However, there have also been cases where petitioners could prove power of attorney abuse by showing the agent did not have the power to make a gift or convey real property. Ultimately, the language of the power of attorney form controls the authority the power of attorney holder has, and what it will take to show the power of attorney has been abused for the agent’s benefit.

What is the Penalty for Abuse of Power of Attorney?

If a court finds that an agent has abused the authority granted under a power of attorney, it can result in both civil penalties and criminal charges. A lawsuit for abuse of power of attorney can force the agent to repay the funds taken from the principal, with interest. The agent could also be criminally prosecuted for fraud, embezzlement, theft, or exploitation in state or federal court. That could result in additional fines, or even a jail or prison sentence.

Get Help Demonstrating Abuse of the Power of Attorney

Demonstrating an abuse of power of attorney authority isn’t easy. You need an attorney who knows the law around fiduciary duties and delegation of authority. At Harrison Estate Law, P.A., our experienced probate litigation attorneys can help you determine if there has been an abuse of the power of attorney designation, and decide if there are grounds to file a lawsuit against the agent. We also can help defend fiduciaries against claims by disgruntled family members looking for more than their fair share. Contact us here or call 352-559-9828 to get help today.

Categories: Estate Planning