This In Brief explores the problem of power of attorney abuse and how state legislatures can protect vulnerable adults against it. It explains how the new Uniform Power of Attorney Act helps prevent, detect and redress abuse, and provides resources to promote enactment of this model law.
In upcoming legislative sessions, states will consider adopting the Uniform Power of Attorney Act (UPOAA or Act). This model law aims to address power of attorney abuse, a type of elder abuse that can have devastating consequences. Research indicates that most states can improve protections for older people by adopting the UPOAA.
What is Power of Attorney Abuse?
A power of attorney (POA) is a legal document used by an individual to allow someone else to act on their behalf. It is commonly recommended by attorneys as a tool for planning for incapacity because a trusted person can stand in for an individual who can no longer make or communicate financial decisions. When used for planning, the POA generally is “durable,” meaning it continues if incapacity occurs.
While POAs enhance autonomy by authorizing a trusted person to act and avoiding court appointment of a guardian, they also confer a great deal of authority without regular oversight or clear standards for agent conduct. Advocates for older people often call the POA a “license to steal.” While there are no national data on the incidence of POA abuse, adult protective services and criminal justice professionals report an explosion of financial exploitation cases of this type.
POA abuse takes many forms. An agent may spend the principal's money for self-dealing purposes, such as buying him- or herself a car rather than paying for the principal's nursing home care. The agent may exceed the intended scope of authority by, e.g., making gifts of the principal's property when that power hasn't been granted. The principal's estate plan may be undermined when assets are given to unintended recipients. The power of attorney itself may be a fraudulent document or a forgery.
State Regulation and the New Uniform Power of Attorney Act
Powers of attorney are regulated by state law and those laws vary substantially. In 2006, the Uniform Law Commissioners (ULC), who draft and propose model laws, approved the Uniform Power of Attorney Act. Among other goals, the UPOAA aims to promote autonomy and prevent, detect and redress power of attorney abuse.
Some of the key provisions of the UPOAA that benefit and protect people who execute POAs include:
- The clear statement of an agent's duties, including the agent's responsibility to act in good faith, within the scope of authority granted, and according to the principal's known expectations or best interest—as well as more specific duties such as preserving estate plans and cooperating with health care proxies;
- Stringent requirements for exercising “hot powers”—those with a high propensity for dissipating property or altering an estate plan;
- The provision that a third party may refuse to honor a POA when the third party reports suspected abuse to an adult protective services agency or knows that someone else has made a report; and
- Liability of malfeasant agents for damages, attorney's fees and costs.