Preventing abuse of powers of attorney

Prof. Lawrence A. Frolik (University of Pittsburgh School of Law) has recently published his article entitled Keep Powers of Attorney in Check, Trial, April 2009, at 42.

Here is an excerpt from his article:

Durable powers of attorney were designed to give people peace of mind, knowing that someone else will make important decisions for them if they become incapacitated. But in the wrong hands, these powers can be abused. * * *

Durable powers of attorney are inexpensive and easy to create, making their use even more widespread. Unfortunately, in some cases, the people chosen as decision-makers misuse the authority granted to them. Reducing the frequency of such abuse and helping victims retrieve their assets present a significant challenge for the law. * * *

[T]he most serious problems arise if the agent exercises the authority of a power of attorney to misuse or steal the principal’s assets. As one commentator has noted, a durable power of attorney is only as protective as the agent is trustworthy. Unfortunately, durable powers of attorney grant broad authority, and when that authority is not given strict oversight, it invites abuse. * * *

How prevalent are these abuses? We don’t really know. Some indicators suggest that financial exploitation of the elderly—including theft, forgery, fraud, undue influence, and coercion—is widespread and on the rise. * * *

The best way to prevent this from happening is to select a trustworthy agent. This is sensible advice, but not so easily implemented * * *

[O]versight and accounting are the best protection against abusive agents. As one of our presidents famously said: “Trust, but verify.”