While many attorneys are aware of the potential for abuse in financial powers of attorney, the same level of potential for abuse exists in the medical power of attorney as well. Yet many attorneys see drafting and execution of powers of attorney as a “loss leader” in the estate planning process, giving the client a canned power of attorney with little, if any time spent counseling the client on the selection of the agent for the powers of attorney. With the financial power of attorney this exposes the principal to exploitation of the client’s financial assets, and the obvious damage that can cause in the client’s lifelong efforts to ensure a safe financial future. But, in the medical power of attorney, that same potential exists for abuse as a tool for exploiting the client.It is the medical power of attorney which typically allows the agent to deal with living arrangements for the principal, including selection of an assisted living facility or other housing arrangements. While power of attorney laws provide no support for instructing group living facilities to grant or deny access to visitors for the principal, the facilities often accept the word of the agent that they agent has that authority.
It is well known among elder law attorneys that isolating a person from long trusted friends and family is a major tool in financial exploitation and ensuring a long-term exploitation scam is successful. Yet, the estate planning attorney often spends little effort in counseling the selection of the agent.
Far too often the attorney simply asks, “who do you want to be the agent”, without any counseling as to how to wisely select an agent. The result is the client simply names the oldest child or a sibling as the agent. Rarely does the attorney ask follow-up questions such as why the client selected the person they did. Even more rare is to remind the client that the power of attorney is a very powerful tool, likely for fear the client will then decide not to obtain the power of attorney at all. The result is the client making a quick selection of an agent, with little or no consideration as to the appropriateness of the agent selected.
A good practice is to use this time with the client as an educational tool, informing the client of factors that should be considered in the selection of the agent. Ask the client to consider how well the potential agent manages their own financial affairs. How well does the potential agent know the values of the client, including their beliefs about medical end of life treatment? How well does the potential agent understand the financial priorities of the client? To the attorney, these are often basic, commonly known, considerations in the selection of an agent. But, for the client, such considerations have never before been brought to their attention, and they are simply naming any particular person as the agent to speed along the estate planning process, and to spend more time on how to craft their will or trust.
The attorney can ask the client about their family dynamics. Very typically, especially if the client does not have a spouse, or the spouse for medical or other reasons, is not an appropriate choice as the primary agent, the client will simply pick a child of the client as the agent, often simply choosing the oldest child as first agent, and younger children as an alternate. This is an appropriate time to ask the client about their children and the family dynamics among the children. Ask the client about the professional or educational background of the potential agent. The oldest may be the child forever growing up or “finding” their way, while a younger sibling is an established, financially independent person, less likely to see the role of agent as a method of solving their own financial problems.
Ask the client if there are unhealthy rivalries among the children. Such power plays among the children often lead to unhappy results when one of the children obtains the position as primary agent, then uses the position to best their siblings in becoming the parent’s trusted child to the detriment of the financial intentions of the parent. In extreme cases such child as agent abuses the power of attorney to divert assets to themselves, thereby destroying the client’s intentions, changing beneficiaries on bank and brokerage accounts, or using the power of attorney to place their names on deeds and financial accounts. But, even in more benign situations, the agent can abuse the intentions of the client for whom they have been made agent, altering long established spending patterns of the client in ways that favor the agent.
If the client wants children to serve as joint agents, inquire as to why. Too often the answer comes back that the client isn’t sure they quite trust either of the children to serve independently, but the client may think that by naming them as co-agents the children will each watch the other, thereby ensuring neither can abuse their status. This is an invitation to a disaster. In the case of the medical power of attorney, it also places medical professionals in an impossible situation, if the co-agents are unable to come to a common decision as to a course of medical action.
While the decision about who should become the agent under a power of attorney is ultimately the client’s decision, it is an appropriate question to ask the client concerning how long they have known the potential agent, and what sort of relationship they have with the potential agent. One of the classic financial scams is the “new best friend” who seems to have come out of nowhere, yet quickly has exerted significant influence in “helping” the client make decisions about where to live, where to invest their money, or how to spend that money, in ways that always seem to benefit the new best friend in some way. Often this new best friend suggests to the client that their family does not understand them or have their best interest at heart, and suggesting to the client that they, the new best friend, are much more attuned to the client’s interests than family members, who the new best friend will suggest are really not that close to the client, or suggesting that long known friends of the client really aren’t appropriate for the client’s trust. The client giving the name of the new best friend as their choice as primary agent can be a red flag for the attorney in spotting a financial scam or undue influence over the client by the new best friend. This red flag can only be spotted if the attorney takes the time to ask the client about the relationship between the client and the new best friend, or how that relationship developed.
In many states attorneys are exempted from mandatory financial abuse reporting. Where this is the case the exemption is typically because the law is designed to encourage open and confidential communication between the client and the attorney, without the client having to worry that the attorney has a mandatory duty to report information the client divulged to authorities as potential abuse. The attorney needs to remember that the role as counselor is an important part of the client-attorney relationship, and by taking the time to learn the background and reasoning of the client’s decisions can go a long way is avoiding exploitation of the client.
The attorney should also dig deeper into the choice of agent if the client offers a financial advisor as the agent. While the client often sees that financial advisor as a trusted individual who already knows the client’s financial situation, the same questions concerning how long the client has known and worked with that financial advisor are appropriate to ask. In fact, many financial investment companies have company policies prohibiting their investment advisors from serving as agent under power of attorney. It is important for the attorney to know, or inquire if they are unsure, of the policies of the company with whom the financial advisor is employed. While a financial advisor’s willingness to act as agent may be an innocent act of trying to assist the client as much as possible, it has often been used as a way to invest the assets of the client for the benefit of the advisor rather than for the benefit of the client. If the client does not have a long-standing relationship with the advisor, or the advisor’s parent company has policies against their advisors serving as agent under a general power of attorney, this is another red flag for the attorney to recognize.
Well-meaning attorneys may believe it is not their position to attempt to influence the client in their selection of agent under power of attorney. They may also suggest that if the acts of the agent are inappropriate, the solution is to contact law enforcement authorities. But, typically the police, and often the district attorney’s office will see the presence of a power of attorney naming the suspected exploiter as agent under power of attorney as making the complaint a civil matter rather than a criminal matter. While this is not the case, it may be the position of both police and the district attorney to not become involved if there is a power of attorney in effect. Financial exploitation cases are difficult and time consuming to put together for prosecution and these agencies may believe too difficult to pursue over other crimes.
In today’s high pressure, billable hour driven, legal environment, attorneys often do not have the luxury that existed in the past of taking time to get to know the client, and in creating an on-going, long term relationship with the client. Yet, taking the time to create such a client-attorney relationship can pay significant benefit is protecting the client from scams and other forms of financial abuse. Starting with a few simply, explanatory questions about how to select the agent under power of attorney can go a long way is assisting the client with their true needs.
