Powers of Attorney Series: When it all goes wrong

This is the second post in our Powers of Attorney series. Our first post discussed considerations in choosing who to name as attorney. This post will highlight some common problems which may arise following appointment of an attorney. Remember that the power is the document; the attorney is the person named to exercise the power.

One feature of an appointment of an attorney that can be overlooked is that a power of attorney (the document) can last a
long time. We all hope for long-lasting trust-filled relationships. Unfortunately in many cases, the trust relationship does not last as long as the power.

Everything that the attorney does is subject to the trust and good faith of the grantor. Once granted the power, like any person in a position of trust, difficult situations can arise where the attorney takes personal advantage of the position.

Some mismanagement can be less deliberate. The attorney may just be inefficient. For example, the attorney may shop at a high price store instead of a discount store.

In the worst cases, however, the attorney acts out of self-interest. This is where serious abuse of the power often takes
place. Here, the attorney uses the power as a license to steal. The attorney transfers assets to the interest of the attorney or the attorney’s relatives or associates. The attorney may also over-charge for services rendered.

What can the grantor do about it?

If the grantor still has the requisite mental capacity when mismanagement is discovered, the grantor can always appoint a new attorney. In that situation, the grantor may also want to contact a lawyer regarding the previous mismanagement. Lawyers can force attorneys to account for their decisions through the court system. However, beware that often a great deal of damage is done before this process even starts.

Sometimes, the grantor gives the power of attorney anticipating a possible mental decline. This is very common with
people as they age. It also occurs as people anticipate the consequences of a health event, such as a stroke. If that is the case, it is too late for the grantor to appoint a new attorney after the health event takes place. However, a grantor or family member of the grantor can still force the attorney to account with the help of a lawyer.

Lindsey Park

The Estate Law Group at McBride Bond Christian LLP

This is not legal advice. Please consult a lawyer before acting on any of the above comments.