[This article was originally published on December 5, 2008. The links were updated on August 23, 2018.]
The misuse of powers of attorney to exploit the elderly appears to be on the rise, but a new AARP report says that states can improve protections for older people by adopting a model law that addresses this type of abuse.
For most people, the power of attorney is the most important estate planning instrument -- even more useful than a will. A power of attorney (POA) allows an individual to name a trusted person -- their agent -- to make financial decisions for them if they ever become incapacitated.
But while a POA avoids the costly and time-consuming process of having a court appoint a guardian or conservator, it also confers a great deal of authority on the agent. This is why advocates for the elderly often call the POA a "license to steal." Increasingly, it seems, dishonest agents have been taking advantage of this license. AARP says that adult protective services and criminal justice professionals are reporting "an explosion" of financial exploitation cases of this type against the elderly.
Powers of attorney are regulated by state law and most states lack adequate safeguards, AARP contends. But help is available. In 2006, the Uniform Law Commissioners, which draft and propose model laws for states, approved the Uniform Power of Attorney Act (UPOAA) to offer states a set of provisions that will help protect people who execute POAs and discourage POA abuse. The UPOAA includes stringent requirements for agents to exercise certain powers, as well as provisions making malfeasant agents liable for damages, attorney's fees and costs.
So far, two states -- New Mexico and Idaho -- have enacted the UPOAA and 12 states are considering adopting it in 2009. AARP's study of current state POA statutes found that "a large majority of state laws lack most of the UPOAA's protections for individuals creating powers of attorney."
The AARP report, Power of Attorney Abuse: What States Can Do About It, compiled by the American Bar Association Commission on Law and Aging under contract to AARP, offers advocates tips for enacting the UPOAA provisions and includes a list of stakeholders who may want to collaborate in the study and recommendation process.
For an Issue Brief on the AARP report and a link to the report's 89-page full text, click here.
For a USA Today article on the report, click here.
For more on powers of attorney, click here.