Many people execute power of attorneys (POA). It’s a good idea to have one in place should the need arise.
However the number one problem with POA’s is gifting by the POA agent. The POA or attorney-in-fact has a fiduciary duty to his or her principal, the person who executed the POA.
First of all, a POA in North Carolina has to contain specific language allowing the POA to gift. If it doesn’t expressly authorize the agent to make gifts to others and/or the attorney-in-fact, then the gifting isn’t authorized.
Second, the POA should only make gifts as the principal did during his or her lifetime. We’re looking for a pattern of giving.
Third, the gifting should not be to the detriment of the principal. The attorney-in-fact/POA should use good faith in making the gifts.
Cases continue to occur where the attorney-in-fact transfers money to himself/herself or others when they should not. Many times in such egregious ways to leave the principal destitute or in a manner that thwarts the estate planning of the principal when he/she dies.
One study by Met Life estimates that there is $2.9 billion in elderly abuse misappropriation every year. See http://www.marketwatch.com/story/power-of-attorney-its-easily-abused-2013-03-19
One way to check this is to require in the power of attorney document that the agent/attorney-in-fact/POA make regular accountings to a separate third party to audit.
When attorney-in-fact does abuse their duties, it is time to contact an attorney to represent the principal.
Sanders Law Firm PLLC handles and litigates POA abuse claims, fiduciary litigation, and Will challenges (Will Caveats—improperly executed wills). Please call 336-724-4707 to discuss your case.