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Shattered Trust: Challenging Power of Attorney Abuse

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Out of all the people who come to me for legal advice, I always feel particularly graced when called upon to assist elders who need protection and a remedy for wrongdoing. This wrongdoing often involves the abuse of a power of attorney granted by the elder to someone close to him or her - often even a family member.

In forty years of law practice, I have sought and also provided a great deal of advice and counsel. Advice sought and given changes along with our culture, our economic times and my particular emphasis in law. In the 1980s and early 1990s, I emphasized land use law. In the late 1990s and most of the 2000's first decade, I emphasized pharmaceutical law, and by 2008 I was providing entrepreneurs and real estate investors legal assistance in defending bank guarantees. Over the last several years, my law firm has been providing a variety of services - weighted toward litigation - to people with probate, estate and trust issues. A part of this practice area involves combating a relatively narrow spectrum of wrongdoing - the abuse of a power of attorney by an attorney-in-fact.

There are many ways to abuse a power of attorney. The first common way is to induce a principal lacking capacity to grant a power of attorney. That said, a relatively small number of people granting a power of attorney lack capacity. For these people the abuse is down the road - later in time when the holder of the power of attorney takes that which does not belong to him or her - the assets of the very person who granted the power of attorney.

Any article on a power of attorney must first cover some brief definitions and factors that impact whether the original creation of a power of attorney is valid. With that in mind, California law provides that any "natural person having the capacity to contract may execute a power of attorney.[1] A person with capacity must have "the ability to communicate verbally, or by other means, the decision, and to understand and appreciate, to the extent relevant, all of the following:

  • a) The rights, duties and responsibilities created by, or affected by the decision.
  • b) The probable consequences for the decisionmaker and, where appropriate, the persons affected by the decision.
  • c) The significant risks, benefits, and reasonable alternatives involved in the decision.[2]

If a power of attorney is attacked on the grounds that the person making the power of attorney lacks capacity, a judicial determination finding incapacity must be supported by evidence of a deficit in a mental function, "by itself or in combination with one or more other mental function deficits, (which) significantly impairs the person's ability to understand and appreciate the consequences of his or her actions with regard to the type of act or decision in question."[3]

The evidence of the correlation between the decision or acts in question and the deficit or deficits must be supported by evidence in at least one of the following categories:

1) Alertness and attention, including, but not limited to, the following:

  • (A) Level of arousal or consciousness.
  • (B) Orientation to time, place, person, and situation.
  • (C) Ability to attend and concentrate.

(2) Information processing, including, but not limited to, the following:

  • (A) Short- and long-term memory, including immediate recall.
  • (B) Ability to understand or communicate with others, either verbally or otherwise.
  • (C) Recognition of familiar objects and familiar persons.
  • (D) Ability to understand and appreciate quantities.
  • (E) Ability to reason using abstract concepts.
  • (F) Ability to plan, organize, and carry out actions in one's own rational self-interest.
  • (G) Ability to reason logically.

(3) Thought processes. Deficits in these functions may be demonstrated by the presence of the following:

  • (A) Severely disorganized thinking.
  • (B) Hallucinations.
  • (C) Delusions.
  • (D) Uncontrollable, repetitive, or intrusive thoughts.

(4) Ability to modulate mood and affect. Deficits in this ability may be demonstrated by the presence of a pervasive and persistent or recurrent state of euphoria, anger, anxiety, fear, panic, depression, hopelessness or despair, helplessness, apathy or indifference that is inappropriate in degree to the individual's circumstances...

(c) In determining whether a person suffers from a deficit in mental function so substantial that the person lacks the capacity to do a certain act, the court may take into consideration the frequency, severity, and duration of periods of impairment.[4]

Assuming that the power of attorney is valid, there are a number of ways that a power of attorney is abused. Common questions posed by internet researchers and real life inquirers include inquiries such as:

How do I protect my mom from my brother who has her power of attorney?

How do I prevent my sister from using my father's credit cards for her own use and charging a Disneyland trip for her whole family?

My sister's son in Fremont is using her power of attorney to get money for his gambling habit at the Indian Casinos. Can I prevent this from happening?

My brother has my father's power of attorney to pay bills. They both live in Sacramento. My brother is using the power of attorney to withdraw money from my father's bank account and using it to pay for my brother's car payments on a new BMW. What can I do?

My grandmother living in Rocklin gave her power of attorney to her caretaker. The caretaker has now put my grandmother's money into the caretaker's own bank account in Oakland. Is it too late to do something?

My grandfather's Will left his Marin County house to his son and daughter. We found out after my grandfather's death that his son transferred the house to himself by use of my grandfather's power of attorney. Is it too late to do anything at all?

I have my father's power of attorney. He lives in Los Angeles and I live in San Francisco. My father is blind, 91 years old, and has short-term memory problems. I just found out that my niece from Roseville had my father sign a new power of attorney naming her as his attorney-in-fact. She did this with my aunt in Santa Rosa and took everything that my aunt had. What do I do now?

My father has been in assisted living for the last two years. When he went into assisted living in Granite Bay he had $350,000 in his bank accounts. My brother has had his power of attorney since my dad has been in assisted living. I just found out that almost all of the money is gone. My brother is now driving a new Cadillac Escalade and took his family to Maui over Christmas - all on the salary of a high school biology teacher. What do I do now?

The above scenarios should give us a flavor of how a power of attorney may be abused by an attorney-in-fact. It's clear that some holders of a power of attorney view it as a license to steal. An AARP public policy paper put the dangers of a power of attorney in stark light: "[W}ith one signature you [grant] another person the ability to sell your house, empty your bank accounts, and cancel your insurance."

It's vitally important for you and your family to stop the abuse of power of attorney before it goes too far. Oftentimes not only a senior's pocketbook is at stake, but their physical, emotional and mental health, as well. If you suspect power of attorney abuse, you already need to be proactive. You and your loved ones deserve protection from exploitation - call me at Hackard Law at 916-313-3031 today.

[1] Probate Code 4120.

[2] Probate Code 812.

[3] Probate Code 811(b).

[4] Probate Code 811.

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