Transcript Slide 1

Love’m & Hate’m:
Powers of Attorney
Sally Balch Hurme, JD
AARP Financial Security
Name the Document!
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Name the most useful, helpful, convenient,
flexible document around?
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Name the most devilish, misused,
misunderstood, abused document available?
The Absolutes
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Contract between Principal and Agent (or Attorneyin-Fact)
Principal MUST have capacity when signed
MUST be voluntary act of Principal
Agent NEVER “gets” a POA
Agent ONLY has authority to do what Principal
stated
Agent must be trustworthy, agent must be
trustworthy, agent must be trustworthy
Act of Agent binds Principal
Authority ALWAYS ends at death
The Variables
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When the authority starts
When the authority ends
What authority is given
Durable
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“…not affected by subsequent incapacity of
principal”
OR
Words that show Principal’s intent that want
powers to be exercisable after Principal’s
incapacity
model law
Uniform POA Act durable unless expressly
states that terminates at incapacity!
Springing
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Sign now but not effective until future event
MUST sufficiently define “event”
May need or want doctor’s affidavit
Properly understood POA is always springing
Signing should NOT mean loss of control
Content of POA
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Very General
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Very Specific
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“Sell my house on March 21 to Mr. Smith”
“Short-form” POAs
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“…and do all such other things as I might do….”
Checklist of possible responsibilities
Potential problems no matter which do
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What can or can’t the agent do
Benefits
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Promotes autonomy and choice
Avoids guardianship
Inexpensive to create
Maintains privacy of personal choices
Personal choice of surrogate
Helps family members or others make
decisions on behalf of individuals who
become incapacitated due to dementia or
other causes.
Agent Limits
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What limits
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Exercise only authority granted
Perform acts specifically enumerated
Fiduciary responsibilities
How make decisions
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Make decisions as Principal would have
Not “I want to get a POA because Mom refuses to
go to assisted living….stop sending sweeps
money….
Principal’s Shoes
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Just because Principal has signed a POA
does NOT mean Principal can’t continue to
act on own
Just because Principal has signed a POA
does NOT mean Agent must be consulted,
concur, agree, co-sign…..
Agent must be in harmony with Principal
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A stands in the shoes of the Principal to carry out
the Principal’s wishes
Agent Accountability
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How held accountable
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Always accountable to Principal
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Change instructions
Change agent
But what happens after incapacity
Draft in accounting
Court standing
Third Party Acceptance
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Doing business with a piece of paper
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No wonder the lender, bank, brokerage wants to use its
“own” form
Third party wants assurance that:
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Agent really is speaking for the Principal
Principal had capacity when signed
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Free and voluntary act
No coercion, undue influence
Knew what was doing and wanted to do it
Agent has the authority to do what seeking to do
Agent Problems --Problem Agents
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Fail to carry out Principal’s wishes
Exceed authority granted
Commingle of funds
Coercion in obtaining
Principal lacked capacity to sign
Exploitation
Case of $1 house underlines
importance of power of attorney
BRIEN T. BOYCE, Staff Writer
08/15/2005
The investigation should reveal how
Smith's former care giver, Lori
Knotek, came into possession of her
home at 24814 Greenview Road that
was reportedly bought in Smith's
name for $250,000, then signed over
to Knotek for $1.
©Daily Nonpareil 2005
Power-of-attorney law left great-aunt
powerless to stop theft
By Steve Esack
August 14, 2005
Three years ago, Arthur Tuerff Jr. accidentally uncovered a
secret no one else in his family knew.
Tuerff learned that Betty Wojtas, his 87-year-old great-aunt,
was rich. So he visited her modest home in a tough
neighborhood near Newark, N.J. He reintroduced himself
after many years. He gained her trust and even persuaded
her to move to a Pennsylvania nursing home. Then he
stole nearly half of the retired office worker's fortune by
tricking her, prosecutors say, into giving him control of her
$1.2 million savings, using a legal document called a
power of attorney.
Copyright © 2005, The Morning Call
Making it harder to steal from family
Scott Daugherty - The Capital
February 21, 2008
A piece of paper cost Loretta Soustek her life savings.
As dementia slowly claimed the 87-year-old woman's mind in 2001,
she signed a power of attorney that gave her niece control over her
finances. With that power in hand, Patricia Skrzesz stole at least
$449,000 - liquidating her sick aunt's investments and using the
proceeds to build a new house for herself and pay off her own credit
card bills.
Skrzesz lined her pockets with her aunt's money for five years before
anyone caught on to what was happening. Since Mrs. Soustek gave
her niece power of attorney, no one questioned Skrzesz when she sold
her aunt's investments - including $400,000 in Amoco Oil stock.
Senior citizens can be easy targets for scam artists
By DANN DENNY
The Herald-Times
May 30, 2008
BLOOMINGTON, Ind.
The elderly woman made a terrible mistake in judgment -- she trusted her daughter.
The woman granted her daughter power of attorney. The daughter promptly deeded her mother's
home to herself, mortgaged the home and defaulted on the mortgage.
We represented the mother," said Jamie Andree, managing attorney for Indiana Legal Services.
“We helped her keep her home."
The outcome for an elderly couple who yielded control of their finances to trusted family members
by granting them power of attorney did not have as happy an ending, Andree said.
"They later discovered that the family members had taken all their money and spent it on
themselves," she said. "What they did was against the law, but there's no watchdog agency to
make sure the power of attorney you've appointed is not spending all your money on himself."
"Power of attorney documents are available all over the Internet, but there is little knowledge
about the rules," Gaal said. "If you're a power of attorney you can't spend the person's money on
yourself or intermingle it with your own personal funds. You also have to keep financial records
and provide accounting on request. If you don't follow these rules, you can be charged with a
criminal offense."
Copyright 2008 Associated Press
Regulators to Speed Probes of Defrauded Senior Investors
By JERRY A. DICOLO
June 11, 2008; Page D3
In February, Finra brought charges that could bring enforcement actions against
brokers John Mullins and his wife, Kathleen Mullins, for allegedly
misappropriating almost $400,000 from 97-year-old widow Esther Weil.
According to Finra, John Mullins served as the victim's financial adviser for more
than 20 years and assumed power of attorney over her assets in 2000.
Mr. Mullins allegedly used Ms. Weil's account to pay down $375,000 in a
mortgage credit-line account, spent $4,653 on groceries and $11,264 at
restaurants and purchased gift certificates totaling $4,000 for a stay at the Four
Seasons hotel in London.
The money was returned to Esther Weil, but Ms. Weil died while the matter was
being pursued.
© Wall Street Journal
NY Judge Breached Fiduciary Duty, Owes Aunt $163,000
December 30, 2003
By Daniel Wise
Brooklyn Justice Michael J. Garson breached a fiduciary duty because
he failed to keep appropriate records while managing the financial
affairs of his elderly aunt under a power of attorney, a Manhattan judge
ruled yesterday.
Because of the breach, Justice Garson must repay his 91-year-old aunt
$163,000.
News accounts have asserted that Brooklyn prosecutors are examining
whether a forgery was involved in the creation of the 1997 power of
attorney.
© 2008 ALM Properties, Inc. All rights reserved.
online.wsj.com
How to Ensure Relatives Don’t Rip You Off
Nov. 28, 2007
Rachel Emma Silverman and Ashby Jones
Sadly, Brooke Astor is making headlines again.
According to the indictment in the Astor case, made public
yesterday in Manhattan, Ms. Astor's son, Anthony Marshall,
abused his power of attorney in order to "unjustly enrich"
himself and others. The indictment alleges that while his
mother had diminished mental capacity, Mr. Marshall took
works of art from her home and used her funds in a variety
of ways: among them, to increase his salary, pay expenses
related to a Maine property that Ms. Astor no longer used
and pay the expenses of a yacht captain.
Copyright ©2008 Dow Jones & Company, Inc.
DAPHNE, Ala., Jan. 12, 2005 Couple sought in abuse of 80-year-old woman
The grandson (and his wife) of an 80-year-old
woman are being sought. Officers freed her Dec. 23
from a room that had been secured with locks, rope,
cable ties, and a metal bar. She said she had been
locked in the room for about six months. The
husband and wife held power of attorney over the
80-year-old woman's legal and financial affairs,
Baldwin County Probate Court records show. She
would be put in her room in the morning, given a
sandwich, and not let out until the evening.
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© 2005 al.com
UPOAA
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Written by Uniform Law Commission
Up to states to enact
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Passed Idaho
Considered 2008 Indiana, Maryland, Virginia,
Maine, Michigan, Minnesota
UPOAA Protections
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New safeguards for incapacitated principal
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Personal liability to restore value
Clear fiduciary standards
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Loyalty
No conflict of interest
Specified persons can ask agent for accounting or
ask court to review agent’s conduct
Duty to keep records
Authority to make gifts must be specified
Smokescreen of Legitimacy
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Exponentially complicates detection and
recovery.
It looks legal
It’s hard to detect
It’s unlikely to be reported
It’s complicated to unravel
It’s complicated prosecute if it is ever
revealed