Taking Care of Mom and Dad: Some Problems with Powers of Attorney
What if you parents' change their mind? As long as they are competent, their power of attorney can be revoked. All they need to do is revoke the power of attorney in writing, sign their revocation in the presence of witnesses with notarization, and provide the revocation to all parties involved with the original power of attorney.
All sides need to be careful with powers of attorney because they can be abused.
With a durable power of attorney, your parents' social security checks can be cashed; investments sold and cashed out and bank savings withdrawn. These sorts of frauds occur more often than you would think. Unfortunately, if your parents become mentally impaired and have assets, they are potential victims. The attorney that seems too secretive and too hard to get hold of, or the new "friend" that all of the sudden has taken a liking to your parents, can be after more than your parents' good graces.
Some states have laws that limit what actions can be taken under a power of attorney. In California, for example, a durable power of attorney must expressly convey authority to the agent to make gifts of the principal's property when it is in the principal's interest, such as when disposal of assets is necessary to qualify for Medicaid or as a planning device to avoid probate. Otherwise, an agent who is also a relative may be prohibited from transferring assets to himself or other family members, even when he knows the grantor would concur.
Durable powers of attorney for financial decisions present pitfalls for the unwary. Unscrupulous "caretakers" could pressure your parents into signing such documents on the premise that they would handle your parents' routine affairs more easily. Once the durable power of attorney has been established, however, they could drain your parents' finances.
If you find that your parents have been taken advantage of, you can contact your state's Adult Protective Service office, whose job it is to protect vulnerable adults from being taken advantage of. The U.S. Department of Health and Human Services Administration on Aging (www.aoa.gov) has a listing of the Adult Protective Service offices nearest to you or your parents.
The key to avoid having someone fraudulently obtaining a durable power of attorney is to know your parents' caregivers and be on top of their financial affairs. The person helping your parents could be doing so to steal from them.
