When an individual executes a power of attorney, they place a significant amount of trust in the person they name as their agent. A financial power of attorney provides the agent with the authority to make legal and financial decisions on the principal’s behalf either immediately, or in the event of incapacity, depending upon how the document is drafted. In either case, such decisions must always be made in the principal’s best interests and within the scope of the agent’s authority.
Critically, when an agent abuses the authority provided to them in a power of attorney, the financial harm they cause can impact not only the principal, but their beneficiaries as well. If you or a loved one plans to execute a power of attorney, it’s important to be able to identify power of attorney abuse in Michigan and know what to do if you notice red flags.
Key Takeaways
Power of attorney abuse occurs when an appointed agent misuses their authority, such as by mismanaging assets or acting in their own self-interest, causing financial harm to the principal and their beneficiaries.
An agent operating under a power of attorney typically faces little to no oversight, which can create opportunities for unscrupulous individuals to misappropriate funds or steal assets from the principal’s estate.
There are many ways power of attorney abuse in Michigan can arise, including spending the principal’s assets for personal use, making unauthorized gifts, and opening new lines of credit in the principal’s name.
Power of attorney abuse can be both a civil and criminal matter. In cases where the financial exploitation is ongoing, it may be necessary to report the agent’s actions to Adult Protective Services or contact law enforcement if theft has occurred.
What is Power of Attorney Abuse?
Power of attorney abuse in Michigan occurs when an individual who has been appointed as an agent misuses the authority granted to them in the document executed by the principal. This type of misconduct can arise when a fiduciary mismanages or steals assets, makes harmful financial decisions, or acts in their own self-interest. Depending on the facts and circumstances, such wrongdoing can be either a civil or criminal matter, or both.
Common Examples of Power of Attorney Abuse in Michigan
An individual who has been named an agent in a power of attorney instrument typically has access to financial accounts, property, and other valuable assets. Unlike the trustee of a trust who must track finances and file accountings, a power of attorney comes with little oversight. This can create opportunities for abuse, allowing an unscrupulous individual to steal assets, misappropriate funds, and ultimately deplete the principal’s estate.
Specifically, there are several different ways power of attorney abuse can occur. An agent may:
Spend the principal's assets for their own use
Make unauthorized gifts
Divert assets to themselves or family members
Change beneficiary designations
Open new lines of credit in the principal’s name
Change life insurance beneficiaries
Make unauthorized real estate or vehicle transfers
Take out loans in the principal’s name
Power of attorney abuse can also occur when an individual creates legal paperwork designating themselves as an agent without the principal’s permission. They might also coerce an individual who lacks mental capacity into signing a power of attorney or present an instrument to financial institutions that had previously been revoked.
Holding the Agent Accountable for Misconduct
Power of attorney abuse in Michigan is taken very seriously by courts. However, it must first be proven that the agent abused their authority, breached their fiduciary duty, or caused financial harm. If misconduct is suspected, any interested party can petition the court to review a power of attorney and revoke it. This may include the principal themselves, family, potential beneficiaries, friends, a government agency, or any other person interested in the principal’s welfare.
Notably, Michigan law provides several avenues that the principal, family members, and other interested parties can pursue if they suspect power of attorney abuse. Depending on the facts and circumstances of the case, the following legal actions may be taken:
Revocation of the POA: If the principal is still mentally competent, they can revoke the POA and execute a new one to provide to their financial institutions.
Request an accounting: Requesting an accounting involves demanding that the agent provide a detailed, written breakdown of the financial transactions conducted on the principal’s behalf.
File a lawsuit: The principal, family members, beneficiaries of the principal's estate, a conservator, or other interested party may bring an action in court for breach of fiduciary duty and to seek return of the misappropriated or stolen assets.
Petition for a conservatorship: Family members may petition for a conservatorship for their loved one, which would override the power of attorney if granted. If there is a risk that the principal’s assets are in immediate danger of dissipation, a preliminary protective order and the appointment of a special conservator may be requested.
In cases where the financial exploitation is ongoing, it may be necessary to report the agent’s actions to the Michigan Department of Health and Human Services Adult Protective Services. They can evaluate reports of suspected financial abuse and investigate the matter when appropriate. Similarly, if theft occurred, it may be necessary to contact law enforcement and pursue criminal charges against the agent.
Contact an Experienced Michigan Trusts and Estate Attorney
If you have concerns about power of attorney abuse in Michigan, it’s essential to have a knowledgeable attorney who can advise you regarding your legal options. The attorneys at Barron, Rosenberg, Mayoras & Mayoras are dedicated to providing high-quality legal services and trusted counsel to clients for a wide range of trusts and estates matters, including those involving power of attorney abuse. Schedule a consultation today by calling (248) 641-7070 in Michigan or (941) 222-2199 in Florida to learn how we can assist you. You can also use our simple online contact form.