Powers of Attorney are useful things to have. I advise my clients to have both medical and financial powers of attorney, not because they may need them in the present, but because they may need them in the future. You can have a power of attorney drafted so that it doesn’t become effective until some event happens – like your mental incapacity – so that no one can do anything with your property while you are still able to handle it yourself.
That isn’t to say, however, that people with ill intent won’t abuse a power of attorney. Let’s say that you give your daughter a financial power of attorney. Five years down the road, your daughter gets into a bad car accident, and in the aftermath she finds herself addicted to opiates, rendering her judgement questionable at best. You still love your daughter, you still work with her to help her with her addiction, but you don’t want your financial matters in your daughter’s hands. So you execute a new power of attorney that allows your son to be in charge. The language of the son’s power of attorney says that the daughter’s is revoked. You sit down with your daughter and explain the situation, but she’s so stoned on Vicodin that you have no idea if she comprehends.
Fast forward ten years. No one has used the power of attorney because there’s nothing wrong with you – you can handle your own business. But suddenly, an illness strikes. COVID perhaps? You are on a ventilator and can’t do anything. Your son goes to the bank to handle your mortgage and finds that your daughter has pulled $250,000.00 out of your accounts – the savings you were intending on living on for the rest of your life – using the old power of attorney.
What can you do?
Well, you can hire a lawyer and go to court, but that’s the long answer. What can you do in the short term?
The bank, if it was reasonably relying on a properly executed power of attorney, won’t necessarily be at fault here. If your daughter did not know that you’d revoked her power of attorney in favor of her brother, she didn’t necessarily act improperly, if she can argue that she is using that money for you in some legitimate way.
The best course of action, when you changed the power of attorney ten years ago, would have been to contact all the financial institutions in which you have money or investments, and give them a copy of the new power of attorney, putting them on notice that your daughter’s power of attorney has been revoked. They can’t say they didn’t know your daughter didn’t have authority if you tell them she no longer had authority.
Reality stinks sometimes, and the truth is that good people develop addictions which radically alter their brain chemistry. They do terrible things they wouldn’t otherwise do. If a drug addicted person suddenly has access to a quarter million dollars, that quarter million dollars isn’t likely to last very long. Large sums of money make rational people crazy – people who have issues even more so. Even if you get a court order requiring your daughter to return the money, she can’t return what she no longer has. If she’s spent it on drugs or who knows what, it isn’t there to be returned. The bank is going to be more responsible, so your best bet for actually getting the money back would be to get it from the bank. This is something you can only do if the bank did something wrong. That is, the bank’s wrongdoing, not the bank being the victim of your daughter’s wrongdoing. You can make this happen by letting the bank know what’s going on. You don’t have to tell them why, just what. “My daughter no longer has power of attorney. My son does. Here’s a copy.”
Nothing in this article should be construed as legal advice. It is being offered for informational purposes only.
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