California Power of Attorney Forms

How Exactly an Agent Can Abuse or Misuse a Power of Attorney

An agent can decide on many matters if the principal gives them legal control over their finances and other personal matters. Abuse of a power of attorney can come in many different forms. Usually, it happens when the attorney-in-fact is not acting in the principal’s best interest or has ill intentions.

For example, if a POA agent is withdrawing funds from the principal’s account and transferring them into their own account, this is abuse. There needs to be a reason for the agent to put funds into their account that benefits the principal; they can’t move funds for their own gains.

Abuse often happens when the principal is incapacitated and cannot recognize what’s happening or speak up for themselves. If they feel like there is nothing they can do about it or feel helpless in the situation, this is considered abuse.

Abuse and misuse can also happen when the agent:

  • Steals or spends money from the principal’s account;

  • Changes or altering the will without the principal’s knowledge or approval;

  • Uses power of attorney after the principal’s death to make decisions without being the executor;

  • Transfers the powers to another person;

  • Takes advantage of the situation when the principal isn’t of sound mind;

  • Takes advantage of an older principal with mental or physical impairments (known as elder abuse);

  • Steals the principal’s identity or uses their personal information for fraudulent purposes;

  • Sells the said personal information online;

  • Coerces someone to create a POA against their will;

  • Makes a fake POA with a forged signature of the principal; or

  • Appropriates some of the principal’s assets.

A lot of abuse cases happen while the principal is incapacitated and cannot call out the ill-natured actions of the agent. Hence, there is one universal piece of advice regarding all POA documents — never grant a power of attorney to a caregiver, especially if it concerns financial matters.

Is There a Penalty for Power of Attorney Abuse?

There are penalties for power of attorney abuse. Some are more serious than others. Some of the charges are serious civil (Cal. Probate Code § 4231.5) and criminal ones (Cal. Penal Code § 368). The severity of the punishment depends on the state law and the level of misuse that occurred.

Some civil consequences include:

  • Lawsuits

  • Compensation to the principal

Some criminal charges include:

  • Imprisonment

  • Prosecution for fraud

  • Prosecution for embezzlement

  • Other damages at the state and federal levels

However, if you become a victim of the power of attorney abuse, there are still legal actions that you or your relative can take. These causes of legal action usually include breach of fiduciary duty and conversion.

How to Prevent or Avoid POA Abuse?

There are several ways you can minimize the risk of someone abusing their authority under a POA document:

  1. Use a limited power of attorney. A durable POA document can be personalized to grant only specific powers to the agent, thus minimizing the potential range of areas someone can act upon. It can either be accomplished by hiring a legal professional who will tailor the document to your needs or using the power of attorney templates available online.
  2. Choose the agent carefully. The person appointed as your or your relative's representative should be trustworthy. It would be best if you also revisited your decision every year or so because even the most loyal person can change because of sudden personal or financial problems.
  3. Track account changes. You should keep an eye on your or your loved one's financial accounts if they become incapacitated, providing, of course, you have the necessary access to do so. Look for any suspicious purchases or freeze the principal's credit report to prevent any illegal loans.

What to Do If a Power of Attorney is Misused?

If a POA agent is misusing their power, you will need to take action immediately. Removing an attorney-in-fact and putting a new one in can take a while (up to several weeks). So, you will need to take action right away so that the power of attorney abuser can be dealt with and the principal can get their lives and finances back on track.

If the agent is misusing the authority granted by the principal, you might also want to contact a lawyer. A legal professional can ensure that all the paperwork is filed correctly. They can help you in probate court and appear before a judge and jury if needed.

If you decide to file a lawsuit or go forward with other punishments, you might also want to get a lawyer with experience dealing with lawsuits and power of attorney abuses.

Who May Contest a Power of Attorney?

Rules vary by state as each state has different laws and regulations. The POA principal can revoke the document at any time to invalidate the powers. However, if they are incapacitated, usually, only family members can contest a power of attorney, including:

  • Adult children

  • Parents

  • Siblings

  • In some states, cousins, aunts, and uncles can all contest a power of attorney.

How Can a Third-Party Challenge a Power of Attorney?

If you see that an agent takes advantage of their principal, such as a loved one or an elderly person who cannot make the best decisions for themselves, you might want to challenge that power of attorney.

Challenging a power of attorney can be more difficult in some states than in others. Reporting abuse is important, so, despite the obstacles, you will need to push through the process and make sure you get a new power of attorney for that person or take away the powers from the current agent.

Step 1. Consult the principal (if not incapacitated)

The principal is the person who has put a power of attorney into place. The attorney-in-fact (agent) is in charge of the principal’s matters and can make decisions on their behalf depending on the situation and other procedures the person has put into place.

If you think your loved one, relative, or friend is being abused by their agent, you need to consult with them first. Ask them if they have given their agent the authority to do the things they are doing. Ask if they have had any money go missing, if there has been any misconduct, or if they had any abuse cases in the past.

They may or may not know of abuse happening depending on their mental capacity and how much they know about the processes their agent is involved in. You will need to check their property, finances, or medical care records to ensure everything is in order.

Step 2. Address the Agent

The second most important part of the process is speaking to the agent. You will need to make sure there is no miscommunication between the agent and the principal. There may be something happening that has simply led to a misunderstanding. Try to get all the information you can before addressing the agent.

You can also address the agent with the principal if you prefer. This way, everything can be discussed by all parties at the same time.

Ask the agent for any records they have about the activity they have been doing on behalf of the principal. This may help you see what they have been doing with finances, medical records, or anything else they have access to.

Step 3. File a petition with the probate court

If you have decided that there is definitely abuse going on between the principal and the POA agent, you should file a petition with the probate court. This will help to remove the current agent and begin the process of establishing a new one.

If you are going to probate court, you might want to consider working with a specialized attorney. An attorney can help you file the correct documents and speak to the judge and other attorneys for you.

Keep in mind that proving the power of attorney abuse can be difficult. You will need to gather all the evidence and paperwork you possibly can to prove that POA abuse happened. You might want to consider filing disputes and lawsuits for any suspicious activities that happened while the other person was the agent.

This will ensure that the principal can get complete control of their life back. Once you have filed all the papers with the probate court, it might take a few weeks or months for people to review the paperwork and decide what they are going to do.

The more paperwork you have to prove the abuse and other issues going on, the more likely your petition to get another agent will be approved.

Power of Attorney Conflict Among Siblings

Unfortunately, sibling conflicts often happen when it comes to the power of attorney situations. Sibling disputes most often happen when the care of where their parent(s) will live cannot be agreed upon.

Sometimes siblings will also fight about finances and property disagreements. Each person will believe they should be in charge of something that the principal might not necessarily want them to do.

Siblings may also fight over who should be the representative under a power of attorney. If this is the case, it is best to appoint a neutral but trusted person who won’t be biased when making important decisions.

Sometimes this will even escalate into a guardianship battle over the parent. This can cost thousands of dollars. If you want to avoid this, you will need to provide precise instructions in a power of attorney about what to do when there are sibling disagreements. Talk about the areas where you think there might be disagreements and warn the agent to prepare them.

In some cases, a mediator will need to help solve the disputes. You might also need to have a trusted attorney on hand to help settle disputes when it comes to sibling fighting.

Final Thoughts

Power of attorney abuse happens too often and needs to be dealt with appropriately. If you suspect POA abuse for yourself or another person, you need to take action immediately. If it’s a family member, you might be able to contest a power of attorney and take action to remove the agent and put another one in place.

No matter what, try always to act quickly to ensure that no more damage happens to the person’s property or finances. You might also want to consider filing a lawsuit or going to probate court with a trusted attorney.