Power of attorney that gives another person the power to make financial decisions for seniors is sometimes described in law as a license to steal. It is shocking that a son or daughter would take advantage of their elderly father, use such a document to exhaust bank accounts or even transfer the ownership of the elderly home.
In general, there are two types of power of attorney for financial matters. The first is known (and generally recommended) as “starting power”. This power of attorney shall only become effective if one or more qualified physicians declare, under penalty of perjury, that the Sheikh is mentally incapacitated and incapable of making sound financial decisions. Only when this medical statement is obtained does the strength begin and become effective.
The second type of power of attorney is effective immediately. There is no requirement for any physician to be involved before the authority becomes effective.
Placed in the wrong hands, either document gives an “agent” authority to handle any and all financial transactions that seniors can undertake. This includes opening and closing bank accounts, changing ownership of those accounts, withdrawing funds, and even transferring ownership from a person’s home. An unscrupulous “agent” can quite easily take advantage of an old man with diminished mental capacity.
The power of attorney requires it to be signed in the presence of a notary. However, a notary’s primary duty is to obtain proof of the identity of the site. In most states, a notary public has no responsibility to assess whether the elder understands the meaning or consequences of the document itself.
Often, the offender contacts a notary beforehand, giving a false story about the dynamics of the family in question. Explains/explains why the elderly need a power of attorney, then expresses gratitude that the notary is willing to help this elderly parent. The unsuspecting notary becomes less suspicious when the sheikh appears confused while presenting the document for signature.
Some good news: the power of attorney for financial affairs can easily be revoked, if the existence of the document (and its misuse) is discovered by an interested and trusted person. However, the elderly often suffer from some form of dementia and do not even remember that the document was created at all. If the elderly person lives alone and isolated, then no one knows anything about the document, except for the offender.
Simply revoking the power of attorney doesn’t always work either. An unscrupulous “agent” can simply take advantage of the elderly person again by repeating the process: wait until the right moment (when the elderly person is mentally impaired) and execute another power of attorney.
If this happens, it may be necessary to establish a trusteeship over the elder’s estate. In California, for example, when a guardianship is created, the power of attorney is automatically terminated. The court then grants authority to a person (“guardian”) to handle the seniors’ financial affairs and to hold the court accountable for all funds received and spent.
These powers of attorney are a valuable tool when placed in the hands of a trustworthy friend or relative. But when greed falls into the wrong hands, it can turn it into a license to steal.