Friday, December 12, 2008

Do we need stronger power of attorney laws?

Any quick Google search will land you a handful of stories about abuse and betrayal. As America ages, elder abuse and financial exploitation are growing problems.

In Allentown PA a trial began for a couple who cared for an elderly man with Alzheimer’s disease, but in the mean time drained 85K from his accounts, buying a Mercedes, an SUV, and taking money to pay their taxes.

A soldier gave his wife a power of attorney before he left for Iraq. After he left she emptied his savings, sold the house and moved away.

In Erie the mother of a dying man used a power of attorney he signed years earlier to change the beneficiaries of his estate from his step-daughters to her own children.

In Connecticut a neighbor received Power of Attorney from a sick elderly woman and promptly empties her bank accounts.

In Upper St. Clair they are still sorting through the mess of a 16 million dollar estate after POA was given to a prominent lawyer

In Billings MT a state legislator was charged with defrauding her stepfather. She told the jury that she thought the man had only a month to live when she withdrew all of his savings.

Springfield Massachusetts woman was charged with stealing $813,000 from the 91-year old woman she had been caring for. An investment house sounded the alarm.

AARP has released a report on Power of Attorney laws and advocates for stronger laws that would make individuals who abuse Power of Attorney authority liable for damages among other changes.

Powers of Attorney are easy to abuse because they generally grant broad decision-making authority. Often exploitative transactions are well within the actual authority authorized. Often there is no third-party monitoring, and the abuse is discovered only when it’s too late.

The AARP is urging support for the New Uniform Power of Attorney Act finalized in 2006. So far that act has been enacted fully in two only two states, Idaho and New Mexico, and only a small number other states have provisions that are similar. In 2009, Colorado, Georgia, Indiana, Maine, Maryland, Michigan, Nevada, Ohio, Oregon, Pennsylvania, Virginia, and Wisconsin will consider adopting the law.

Some of the provisions the UPOAA . . .

1. Permit interested parties to petition a court to terminate the POA if the agent is acting improperly.
2. Set forth default standards for agents’ fiduciary duties.
Require express authorization for certain authority, such as gift-making and changing beneficiary designations.
3. Require notice by the agent when no longer willing or able to act.
Revoke a spouse agent’s authority upon annulment or filing for divorce.
Provide for remedies and sanction for abuse.

Here are a couple of comparisons of the Utah State Code versus the new Uniform Code.

UPOAA Section 108(a) & (b)

In a power of attorney, a principal may nominate a conservator of the principal’s estate or guardian of the principal’s person for consideration by the court if the protective proceedings for the principal’s estate or person are begun after the principal executes the power of attorney. (Except for good cause shown or disqualification, the court shall make its appointment in accordance with the principal’s most recent nomination.)

(b) If, after a principal executes a power of attorney, a court appoints a conservator or guardian of the principal’s estate or other fiduciary charged with the management of some or all of the principal’s property, the agent is accountable to the fiduciary as well as to the principal. The power of attorney is not terminated and the agent’s authority continues unless limited, suspended, or terminated by the court.

Utah Law


(5) A conservator may be appointed for a principal even though the principal has a valid power of attorney in place. If a conservator thereafter is appointed for the principal, the attorney-in-fact or agent, during the continuance of the appointment, shall account to the conservator rather than the principal. The conservator, pursuant to court order as provided in Subsection 75-5-408(1)(d), has the same power the principal would have had if he were not disabled or incompetent to revoke, suspend, or terminate all or any part of the power of attorney or agency.

Here are the sections on designating specific duties.

Section114(b) Agent’s Duties
(b) Except as otherwise provided in the power of attorney, an agent that has accepted appointment shall
1. act loyally for the principal’s benefit
2. act so as not to create a conflict of interest that impairs the agent’s ability to act impartially in pthe principal’s best interest.
3. act with care, competence, and diligence ordinarily exercised by agents in similar circumstances
4. keep a record of all receipts, disbursements, and transactions made on behalf of the principal
5. cooperate with a person that has authority to make health-care decsions for the principal to carry out the principal’s resouagle expectations to the extent actually known, and otherwise, act in the principal’s best interest
6. attempt to preserve the principal’s estate plan, the the extent known, if preserving the plan is consistent with the principal’s best inetrest based on all reveant factors, including
a. the value and nature of the principal’s property
b. the principal’s foreseeable obligations and need for maintenance
c. minimization of taxes including income, estate, inheritance, generation-skipping transfer, and gift taxes
d. eligibiligyi for a benefit program, or assistance under a statute or regulation.
Section 201(a)
Requiring specific grants of authority to
1. create, amend, revoke, or terminate a trust
2. make a gift
3. create or change rights of survivorship
4. create or change a beneficiary designation
5. delegate authortiy granted under the POA
6. waive the principal’s right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan
7. exercise fiduciary powers that the principal has authority to delegate
8. disclaim property, including a power of appointment.

Utah Law


A power of attorney may not be construed to grant authority to an attorney-in-fact or agent to perform any of the following, unless expressly authorized in the power of attorney:
(1) create, modify, or revoke an inter vivos revocable trust created by the principal;
(2) fund, with the principal's property, a trust not created by the principal or by a person authorized to create a trust on behalf of the principal;
(3) make or revoke a gift of the principal's property, in trust or otherwise; or
(4) designate or change the designation of beneficiaries to receive any property, benefit, or contract right on the principal's death.

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