Recommendations to Prevent Abuse of Durable Powers of Attorney

Nina A. Kohn (Assistant Professor of Law, Syracuse University College of Law) has recently published her article entitled Elder Empowerment as a Strategy for Curbing the Hidden Abuses of Durable Powers of Attorney, 59 Rutgers L. Rev. 1 (2006).

Here is an excerpt from the article’s conclusion:

[M]ost states’ DPOA enabling statutes create powerful documents that allow agents to exercise broad discretion while providing little guidance as to how they are to make decisions on behalf of principals. The result is a system in which enforcing an agent’s fiduciary obligation is difficult, agents face uncertainty and confusion, and principals are fundamentally disempowered. Such a system not only facilitates financial exploitation of elders, but also unnecessarily burdens agents and has the potential to transform family dynamics at the expense of principals’ physical and psychological well-being.

One way to clarify the DPOA relationship and the expectations of principals and agents alike–and at the same time address concerns about financial exploitation–is to have the AIF and the principal communicate openly with one another about expectations and potential transactions undertaken pursuant to the DPOA. However, only six states have statutory requirements that explicitly require the AIF to keep in contact or communicate with the principal, and there is no general common law duty to do so. Moreover, in no state is an agent necessarily required to notify a principal before undertaking a transaction, even if the principal has full capacity and the transaction would fundamentally transform the principal’s life.

To continue to allow agents to act without communicating with principals is to ignore agents’ basic duty of obedience. Moreover, the benefits of such communication far outweigh any additional burden it may place on the parties. Communication clarifies the agent’s role, discourages the agent from acting in a manner inconsistent with the principal’s wishes and values, reduces the extent to which the relationship can be expected to disempower the principal, and increases the chance of discerning misuse by putting the principal in a better position to monitor the relationship for exploitation.

Although it is unrealistic and unreasonable to require such communication to take place in advance of all transactions, some transactions are so fundamental to the principal’s life and lifestyle that the agent should be explicitly required to notify the principal before undertaking them. Requiring notification of such “fundamental transactions,” will help curb over-reaching and allow elders greater control over their own lives. Moreover, by giving protection to agents who do engage in advance notification, states can protect well-meaning agents from subsequent legal challenges and the legal system from avoidable litigation.

These simple reforms would help DPOAs live up to their promise of being tools of empowerment. * * * In short, the DPOA, which for so long has been touted as a way to increase elder autonomy, could finally become a tool for advancing society’s acceptance of the notion that elders retain autonomy.