Elder Financial Abuse: Power of Attorney Scams
Giving someone power of attorney over an individual legally allows them to make certain decisions on that person’s behalf. This is often necessary in situations where a person is elderly, intellectually disabled, or otherwise incapacitated. When properly used, giving power of attorney to a trusted individual can often make things easier for
When properly used, giving power of attorney to a trusted individual can often make things easier for a person who is unable to travel, sign paperwork, open or close bank accounts, deal with insurance policies, and engage in other necessary financial activities. Unfortunately, power of attorney can be abused, often by financial advisors or brokers, leading to serious financial consequences for the victim.
What are the major types of power of attorney?
- Non-durable power of attorney is a common kind of power of attorney in which you give another individual the power to conduct financial and legal transactions in your name. However, if you become incapacitated or mentally disabled, the power of attorney will expire. Therefore, this type of power of attorney is not often used when dealing with the elderly.
- Durable power of attorney is the most common type of power of attorney used when dealing with the elderly. This type of power of attorney remains valid even if you become completely incapacitated and cannot make decisions for yourself.
- Springable durable power of attorney is a power of attorney that “springs” into action if you become incapacitated. This type of power of attorney becomes valid the moment you are incapacitated and stays valid as long as you remain incapacitated.
How can power of attorney be abused?
When someone is granted power of attorney over another individual, they are referred to as an agent. In order to help an elderly or otherwise incapacitated individual with legal, financial, or medical decisions, an agent is often given access to bank accounts and trusts, credit cards, social security numbers, and other sensitive data. In the case of a financial advisor, it would also provide discretion over their investment accounts. Sadly, this information can easily be abused in order to siphon funds and property away from a helpless victim.
Some of the risks a victim may face from power of attorney abuse include:
- Embezzlement/Conversion: This occurs when an agent uses an elderly individual’s assets for their own benefit. To prove that conversion occurred, it must be shown that the agent used the individual’s property in a way that was ‘inconsistent with their rights of ownership.’
- Fraud, Forgery: It’s very simple for a person with power of attorney over another individual to sign checks to themselves, accomplices, or other individuals, in the name of an elderly individual. If the person with power of attorney is the only person accessing the elderly individual’s checking accounts, it may take years to discover the fraud (if it’s discovered at all).
- Identity Theft: Much like fraud or forgery, power of attorney identity theft is incredibly easy for someone to commit. All they need to do is sign up for a credit card, debit card, department store card, or other loan using the other person’s personal information.
- Medical Abuse: In many situations, abusive family members, friends, or others with power of attorney will attempt to send an elderly individual to a nursing home without their permission, in order to make it easier to siphon away their funds. In other situations, an abusive individual with power of attorney will attempt to stop an elderly individual from getting important medical care in order to preserve more of their funds for the abuser’s later use.
- Breach of Fiduciary Duty: In most power of attorney contracts, the individual granted the power of attorney must abide by a set of rules. These usually include keeping the elder informed about things that affect their interests, only gaining profits from the elder’s assets with prior consent from the elder, avoiding acquiring any investments or getting involved in plans that go against the best interests of the elder, and avoiding transferring any of the property away from the elder, unless the power of attorney agreement specifically agrees to it.
The majority of these items cover a wide range of activities committed by unethical brokers or advisors that could constitute power of attorney fraud or elder financial fraud, including unauthorized trading, misrepresentation, unsuitable investing, and churning, the latter of which is buying or selling investments for the sole purpose of generating commissions.
What are the common signs of power of attorney abuse?
There are a variety of signs of power of attorney abuse— and if you think someone you care about may become a victim, it’s essential to keep your eyes open at all times. Some of the common signs of elder power of attorney abuse include:
- Sudden amounts of money missing from an elderly individual’s checking, savings, or investment accounts
- A sudden or sustained burst of activity in investment accounts
- Missing valuables, such as jewelry, cash, or antiques, in an elderly individual’s home
- Lack of contact or communication with friends or relatives, especially at the urging of the elderly individual’s agent
- Agent of an elderly person suddenly appears to have (or brags about having) more money or high-priced material possessions or experiences, such as cars, clothes, jewelry, or expensive vacations
How can power of attorney fraud and abuse be prevented?
If you are elderly and believe that you may soon need to identify another person to give power of attorney, it’s essential to choose the right individual. It’s extremely important to avoid giving power of attorney to someone you do not trust or know well. In addition, it’s also a smart choice to never give power of attorney to financial advisors or brokers, who may not have your best interests at heart. If your close relative is elderly and you cannot accept power of attorney over them due to time or distance constraints, it’s vital to ensure that they do not give their power of attorney to a less-than-trustworthy individual.
Do you suspect you or an elderly friend or loved one is a victim of financial abuse involving a broker or advisor?
Elderly individuals who are victims of financial fraud committed by an unethical broker or advisor and abuse can be a serious challenge, usually due to the fact that many of these incidents are not reported.
As the population of elderly individuals grows, unethical individuals see millions of potential new victims. To prevent elder financial abuse from getting out of hand, investigate suspicious behavior and activity as soon as possible, and if you think you see evidence of elder financial fraud, contact an experienced securities arbitration and elder financial fraud attorney immediately.
The attorneys at Silver Law Group are leaders in the field of securities arbitration. We represent individual and institutional investors across the United States who have lost money at the hands of a trusted financial advisor.
Our services are provided on a contingency-fee basis, which means we are only compensated if there is a recovery of losses. Contact us for a complimentary consultation about your situation.
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