Probate Litigation Attorneys
Between 2013 and 2017, financial institutions have reported to the federal government over 180,000 suspicious activities targeting older adults, involving a total of more than $6 billion. In 2017 alone, banks and other financial institutions filed approximately 63,500 reports with the U.S. Department of Treasury regarding suspected financial exploitation of older adults. That number has continued to rise. The full report by the Consumer Financial Protection Bureau can be found here. These are only the reported figures. A 2017 World Health Organization study determined that 1 in 6 adults over 60 was the victim of some form of exploitation or abuse. Because of the feelings of shame and embarrassment that inevitably comes from being duped, and because of other circumstances where the person may not even know he or she is being exploited, these numbers are most likely low.
One common source of financial abuse of the elderly is with a financial power of attorney document. A financial power of attorney document is an instrument where a person known as the “principal” appoints an “agent” to act on his or her behalf regarding his or her finances, subject to certain conditions. These are common documents and, when used appropriately, can be beneficial for all involved.
However, these instruments are sadly common opportunities for an elderly person to be exploited financially. One probate judge, years ago, commented in a pretrial proceeding that more crime is done with a power of attorney than a .38 caliber Saturday Night Special.
If you are preparing your estate plan, undoubtedly your attorney will recommend a financial power of attorney. Understanding that these instruments put you at risk of abuse, the question is thus, whether there is anything you can do to protect yourself from your agent’s misuse of the power of attorney. Of course, the answer is yes – you can mitigate problems by taking a few simple steps:
KNOW YOUR OPTIONS
First, demand that your attorney meets with you alone before the power of attorney is signed or prepared. If you feel like you cannot make that demand because you are afraid of your agent or because you are being pressured, find an opportunity to call your attorney or someone else you trust to get assistance. Second, make sure you read and understand the provisions within the power of attorney and do not allow provisions to be inserted that are not consistent with your needs. For example, the power to gift and or cancel or change beneficiary designations are common provisions that are often used to give you financial flexibility. Unfortunately, they are also often used to enable self-dealing. Third, your choice of an agent (the person to whom you are placing your trust and confidence) is very important. A child, for example just because one child is the oldest does not mean he or she is the most qualified to be your agent. If, for example, that child likes to control your other children, it may be a terrible idea for he or she to serve as your agent. The same is true for a child who has proven unable to manage his or her own financial affairs or otherwise has their own debt problems.
But, if a power of attorney is in place already, what can you do? A power of attorney is revocable, which means there are many things you still can do to protect yourself if an instrument is already in place. If you lose trust in your named agent, you can void the power of attorney. This requires notice to the agent to be effective, but you should also record it with your county so that third parties, such as financial institutions, would be on notice that the agency has been revoked. You can also revise the power of attorney to remove provisions that you find to be problematic. If you are concerned that your agent has made or might make inappropriate gifts, you can remove that power. Another possibility is for you to re-title your assets. For instance, you can create a trust, transfer assets to the trust, and appoint a professional trustee to manage those assets and take them out of your agent’s control. Thus, your agent under the power of attorney will have less opportunity to misuse the power.
If the power of attorney is necessary – and we recommend you have a power of attorney to mitigate against the potential need for a court-appointed guardian and for other reasons – you still need to pay attention. Under circumstances where you have concerns about your agent or your assets, you can confront the agent with your questions. If safety is an issue, find a way to speak to someone like a banker, an attorney, a medical professional, or call the local adult protective services hotline. These people have mandatory duties to report financial abuse and exploitation in Ohio and should act in your best interests. If you believe your attorney is working for your agent, and not you, reach out to an attorney that only will represent your interests and help you seize back control.
PROTECT YOUR LOVED ONES
If you suspect financial abuse of another person, what can you do? Under Ohio’s power of attorney statutes contained in chapter 1337 of the Ohio Revised Code, a broad category of people have authority to seek court intervention to verify if the agency has been abused. The principal, and certain family members if the principal lacks capacity or refuses consent, can ask a court to review the agent’s conduct under a power of attorney. In addition, the following people have authority to ask questions of an agent’s conduct under a power of attorney. Those people include:
- the principal's spouse, parent, or descendant;
- an individual who would qualify as a presumptive heir of the principal;
- a person named as a beneficiary to receive any property, benefit, or contractual right on the principal's death or as a beneficiary of a trust created by or for the principal
- a guardian, a conservator, or other fiduciary acting for the principal,
- or if you are a person authorized to make health-care decisions for the principal
What if the principal has passed away? Is it too late? The simple answer is no, it is not too late. If the principal has passed away, interested persons (those with standing to sue) can take the matter to court. Who qualifies as an interested person may vary depending on the circumstances, but may include an executor, administrator, trustee of the deceased person’s estate, beneficiary or next of kin. If there is evidence that the agent misappropriated funds, he can be made to return those funds plus interest.
Attorneys at Reminger confront these issues daily and can help you navigate these difficult situations. If you are a victim of financial abuse, or if you suspect an elderly friend or loved one has been the victim of financial abuse or exploitation, please contact a member of our practice team.
As co-chair of Reminger Co., LPA's Probate and Trust Litigation practice group, Adam focuses his practice on matters of estate, trust, probate and guardianship controversy. Whether he is retained to pursue or defend a will contest ...
Tim focuses his practice on legal matters involving probate, guardianship, trust, and estate administration. Tim represents trustees and executors of estates, creating flexible plans to meet their needs. Tim's experience in the ...