Name the Document! Name the most useful, helpful, convenient, flexible document around? Name the most devilish, misused, misunderstood, abused document available?
The Absolutes Contract between Principal and Agent (or Attorney- in-Fact) Principal MUST have capacity when signed MUST be voluntary act of Principal Agent NEVER “gets” a POA Agent ONLY has authority to do what Principal stated Agent must be trustworthy, agent must be trustworthy, agent must be trustworthy Act of Agent binds Principal Authority ALWAYS ends at death
The Variables When the authority starts When the authority ends What authority is given
Durable “…not affected by subsequent incapacity of principal” OR Words that show Principal’s intent that want powers to be exercisable after Principal’s incapacity model law Uniform POA Act durable unless expressly states that terminates at incapacity!
Springing Sign now but not effective until future event MUST sufficiently define “event” May need or want doctor’s affidavit Properly understood POA is always springing Signing should NOT mean loss of control
Content of POA Very General “…and do all such other things as I might do….” Very Specific “Sell my house on March 21 to Mr. Smith” “Short-form” POAs Checklist of possible responsibilities Potential problems no matter which do What can or can’t the agent do
Benefits Promotes autonomy and choice Avoids guardianship Inexpensive to create Maintains privacy of personal choices Personal choice of surrogate Helps family members or others make decisions on behalf of individuals who become incapacitated due to dementia or other causes.
Agent Limits What limits Exercise only authority granted Perform acts specifically enumerated Fiduciary responsibilities How make decisions Make decisions as Principal would have Not “I want to get a POA because Mom refuses to go to assisted living….stop sending sweeps money….
Principal’s Shoes Just because Principal has signed a POA does NOT mean Principal can’t continue to act on own Just because Principal has signed a POA does NOT mean Agent must be consulted, concur, agree, co-sign….. Agent must be in harmony with Principal A stands in the shoes of the Principal to carry out the Principal’s wishes
Agent Accountability How held accountable Always accountable to Principal Change instructions Change agent But what happens after incapacity Draft in accounting Court standing
Third Party Acceptance Doing business with a piece of paper No wonder the lender, bank, brokerage wants to use its “own” form Third party wants assurance that: Agent really is speaking for the Principal Principal had capacity when signed Free and voluntary act No coercion, undue influence Knew what was doing and wanted to do it Agent has the authority to do what seeking to do
Agent Problems --Problem Agents Fail to carry out Principal’s wishes Exceed authority granted Commingle of funds Coercion in obtaining Principal lacked capacity to sign Exploitation
Making it harder to steal from family Scott Daugherty - The Capital February 21, 2008 A piece of paper cost Loretta Soustek her life savings. As dementia slowly claimed the 87-year-old woman's mind in 2001, she signed a power of attorney that gave her niece control over her finances. With that power in hand, Patricia Skrzesz stole at least $449,000 - liquidating her sick aunt's investments and using the proceeds to build a new house for herself and pay off her own credit card bills. Skrzesz lined her pockets with her aunt's money for five years before anyone caught on to what was happening. Since Mrs. Soustek gave her niece power of attorney, no one questioned Skrzesz when she sold her aunt's investments - including $400,000 in Amoco Oil stock.
Senior citizens can be easy targets for scam artists By DANN DENNY The Herald-Times May 30, 2008 BLOOMINGTON, Ind. The elderly woman made a terrible mistake in judgment -- she trusted her daughter. The woman granted her daughter power of attorney. The daughter promptly deeded her mother's home to herself, mortgaged the home and defaulted on the mortgage. We represented the mother," said Jamie Andree, managing attorney for Indiana Legal Services. “We helped her keep her home." The outcome for an elderly couple who yielded control of their finances to trusted family members by granting them power of attorney did not have as happy an ending, Andree said. "They later discovered that the family members had taken all their money and spent it on themselves," she said. "What they did was against the law, but there's no watchdog agency to make sure the power of attorney you've appointed is not spending all your money on himself." "Power of attorney documents are available all over the Internet, but there is little knowledge about the rules," Gaal said. "If you're a power of attorney you can't spend the person's money on yourself or intermingle it with your own personal funds. You also have to keep financial records and provide accounting on request. If you don't follow these rules, you can be charged with a criminal offense." Copyright 2008 Associated Press
UPOAA Written by Uniform Law Commission Up to states to enact Passed Idaho Considered 2008 Indiana, Maryland, Virginia, Maine, Michigan, Minnesota
UPOAA Protections New safeguards for incapacitated principal Personal liability to restore value Clear fiduciary standards Loyalty No conflict of interest Specified persons can ask agent for accounting or ask court to review agent’s conduct Duty to keep records Authority to make gifts must be specified
Smokescreen of Legitimacy Exponentially complicates detection and recovery. It looks legal It’s hard to detect It’s unlikely to be reported It’s complicated to unravel It’s complicated prosecute if it is ever revealed