What if your Power of Attorney Agent turns out to be a Thief?
No one wants to believe that it’s a possibility, but over the years, I’ve heard more horror stories of kids stealing from their incapacitated parents, or “borrowing” money hoping their siblings wouldn’t find out what they were doing.
We advise our clients that having a power of attorney is the foundation of any good estate plan. A power of attorney allows you the control to name someone you trust to act as your advocate and on your behalf if you are unable to act for yourself. But what if you choose wrong? The child you picked turns out to be a bad seed?
When naming an Agent under a durable power of attorney, he/she has broad rights to control and use your financial assets. A durable power of attorney is one that continues after you have become incapacitated. The advantages to having a durable power of attorney is that you, rather than a Judge, appoint the person having control over your assets, you avoid the time and expense of a Guardianship proceeding and you have the peace of mind knowing that if you become incapacitated, you have already implemented a plan. Should you change your mind while you are of sound mind, you can revoke or amend your power of attorney. But, what if you are not…???
The Court can remove a fiduciary (your power of attorney Agent) if the Court believes that the Agent has taken actions counter to those in your best interest for breaching their duty. Breaching their duty means that they are acting to achieve their interests rather than your own. A fiduciary’s decisions need be free of conflict and self-dealing.
To successfully execute a claim for breach of duty, one must prove that a fiduciary relationship existed; that there was a breach of that relationship; and that the breach caused financial damage that the Court can rectify. Clearly, a Power of Attorney provides a fiduciary relationship but what constitutes a breach is more complex. Improper gifts, commingling of funds, using money for their own expenses are clear illustrations of a breach. But there are also many more gray areas.
If you are an interested party who believes that an Agent has abused his/her power, you have the right to hire an Estate Litigation Attorney to force the Agent’s hand and provide a detailed account of their actions. The formal accounting must include information on all assets as well as every transaction that took place during their tenure as Agent. If the Agent committed a breach of duty, the judge could surcharge the Agent, forcing repayment out of the Agent’s personal funds. Further, the judge could also remove the Agent and appoint a Guardian of the Person and Guardian of the Estate to make future decisions for the incapacitation party.
To remove the Agent, we must have proof. This is one of the areas that client’s waiver on. They believe the Agent has used mom’s funds for their own but do not have any tangible proof. We often find the proof by way of witness testimony, depositions, interviews, and/or subpoenaed documents. Judges take the allegation of impropriety seriously and will accept evidence if provided correctly. Keep in mind that the Agent is permitted to use Estate funds to defend themselves while you do not.
Some common reasons for removal of an Agent are friction between co-Agents, failure to comply with terms, non-cooperation, non-compliance with an Order of Court, asset neglect or mismanagement, misconduct, abuse of discretion, has misappropriated funds, the Agent has become incapacitated, unfit, refuses to act.
Time is of the essence. If you suspect abuse by an Agent, call us today to review your rights.