Not every type of financial abuse against elders is perpetrated by a stranger. Sometimes family members or close friends scheme to take advantage of an elderly person’s declining faculties. One common type of fraud involves a financial power of attorney. This is a document that gives a person the authority to act on behalf of another person regarding financial matters, such as bank accounts. (There are other types of powers of attorney as well, such as health care powers of attorney, but scams generally involve financial powers of attorney.) A power of attorney is a useful instrument in most situations, allowing a loved one to help an elderly person manage their finances. When it is abused, though, the elderly person may lose their savings and assets to an unscrupulous family member whom they should not have trusted.
You can take legal action against someone who perpetrates a power of attorney scam, as discussed further below. However, preventing the scam in the first place is usually a better strategy. You should not grant a power of attorney to anyone whom you do not fully trust, and you should not release it in any situation in which this is not necessary. Sometimes a power of attorney is needed only temporarily, in which case the elderly person should take it back as soon as it is no longer necessary. You should be suspicious if the person who holds the power of attorney transfers property into their own name. When this happens, you should promptly demand the return of the property and an accounting of their actions.
Common Legal Claims
Breach of fiduciary duty
Claims Based on Power of Attorney Scams
The first step to take when you realize that someone has perpetrated a power of attorney scam is to revoke the power of attorney. Then, you can pursue the return of any stolen money and assets. An attorney can help you file a civil action against the perpetrator. This is necessary even if they are facing criminal charges, since a criminal case may not result in the return of the stolen property.
Legal claims in this situation are based on the fiduciary duty that the person who holds the power of attorney owes to the elderly person. They are legally required to act with the highest level of good faith when they are using the power of attorney, remaining loyal to the interests of the elderly person. They cannot profit from actions related to the power of attorney without the consent of the elderly person, and they cannot act in a way that is contrary to their interests. They must consistently inform the elderly person about any actions or events that may affect their interests. Unless they are permitted by the document, they cannot transfer the property of the elderly person into someone else’s name, including their own.
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An elderly person also may have a cause of action for conversion following a power of attorney scam. This means that the person who held the power of attorney did not respect the elderly person’s right of ownership over the property. An elderly person would need to show that the defendant failed to deliver the property to them upon their demand.
Remedies for Power of Attorney Scams
In addition to returning the property to the elderly person, or compensating them for the value of the property, a defendant may be ordered to pay attorney fees and interest. Sometimes punitive damages are available in these cases, although this would require showing a higher level of culpability. A court may award punitive damages when a defendant’s conduct was outrageous or intentional, such as when they committed criminal fraud. Sometimes collecting the full amount of the award can be challenging.