Challenging a POA

Many people believe that once someone signs a Power of Attorney, for either health care or financial decisions, or a Patient Advocate Designation, then all control has been surrendered to the person designated to make decisions (called the Attorney-in-Fact or Agent). They feel that the rest of the family has no choice but to step aside. In reality, the appointment of an Attorney-in-Fact or Agent is often just the beginning.

First, a Power of Attorney or Patient Advocate Designation is only valid if it was executed in compliance with Michigan law. This means that it must be in writing, and properly dated, and met certain other legal requirements.

Second, and often more importantly, the person signing the document must have been legally competent at the time of execution. The test for legal competence is whether the person is of “sufficient mind to understand in a reasonable manner the nature and effect of the act in which the person is engaged.”

When the person signing the document has dementia or Alzheimer’s, often it is not easy to determine whether they were competent or not. Individuals suffering from these conditions have good days and bad, may be sharp and lucid one moment, and not the next. Medical records and opinions from doctors and experienced elder law attorneys are the most important ways to establish whether someone was or was not competent.

Third, even when dealing with a valid Power of Attorney or Patient Advocate Designation, the Attorney-in-Fact, or Agent, has a fiduciary duty to act in the best interests of the principal. For health care decisions, this means deciding on where to live and whom to provide care. These decisions should be based on what is best for the person in need of care, not what is most convenient for the Attorney-in-Fact. Often Agents want to make these decisions based on what will maximize their inheritance or what is easiest for them. This does not meet the Agent’s fiduciary obligation!

When families do not get along, visitation problems often arise. Sometimes, an Agent-in-Fact does not want family members to spend time with their elderly parent or other loved one. Other times, there is complete isolation. These are often warning signs of abuse. Families should never passively accept these situations.

Other times, visitations are restricted for legitimate reasons, such as when another family member is verbally abusive or aggressive towards the elderly person. Disputes frequently begin around visitation issues, especially in second marriage situations and families who have unresolved sibling rivalries. Legally, the key always is what is in the best interests of the vulnerable adult. Frequent visits by loving and caring family members are usually in their best interests.

For financial decisions, the legal duty requires the Attorney-in-Fact to, at the very least, refrain from self-dealing. Although no Michigan case law has definitively addressed it, such an Agent-in-Fact must likely conform to Michigan’s prudent investor rule. This means that he or she must “invest and manage assets held in a fiduciary capacity as a prudent investor would” based on the terms of the governing document and the circumstances.

What does this mean? Simply, the Agent has a duty to manage the assets prudently, and with the goal of helping the person who owns the assets. Often, a person with Alzheimer’s or dementia requires much more conservative investments than he or she had previously chosen earlier in life. This may require a sale of stock or other securities, and insuring the portfolio is suitable, diversified, liquid and safe from extreme market fluctuations.

When the loved one has significant assets, following the advice of a credentialed, knowledgeable and ethical financial planner is essential to fulfilling the prudent investor rule. But Agents must use common sense too – just because a licensed stock broker or annuity salesmen recommends an investment does not make it suitable for a senior citizen with Alzheimer’s or dementia. In fact, it is unfortunate, but some financial advisors prey on elderly clients by selling them unsuitable, high risk investments that generate large commissions. Those helping a senior adult with their investments must always be aware of this danger.

If you ever have doubts about whether a certain investment is appropriate, have it reviewed by a disinterested financial planner experienced in working with seniors, or an elder law attorney knowledgeable about spotting unsuitable investments.

What do you do if you believe that a Power of Attorney or Patient Advocate Designation is being abused, or that a vulnerable adult’s best interests are not being protected, either financially or otherwise? There are several options.

One is to talk to the family member you have concerns about. Sometimes, simply opening a dialogue can clear up misunderstandings. A second option is to file a complaint with adult protective services. Unfortunately, this approach usually does not work except in cases of extreme abuse, neglect or exploitation.

The best options are to either consult with an attorney experienced in dealing with issues of this nature, or to seek guardianship and/or conservatorship in probate court.