Power of Attorney Abuse in Texas
by Russell Aldrich | January 31, 2023
A power of attorney (the “POA”) is a legal document that allows someone (the “principal”) to give another person (the “agent” or “attorney-in-fact”) the authority to make decisions and take actions on their behalf.
Power of attorney litigation arises when there is a dispute over the scope of the power of attorney or the validity of the document itself. In an estate and probate context, this frequently occurs when there are allegations of undue influence, elder abuse, or financial exploitation of a vulnerable individual by one or more individuals.
What is power of attorney litigation?
Power of attorney abuse is just one reason why power of attorney litigation occurs. Litigation involving a power of attorney can occur in a number of situations, including:
- Challenges to the validity of the Power of Attorney: A party may challenge the validity of the POA, arguing that it was not properly executed or that the principal did not have the capacity to grant the authority.
- Disputes over the scope of the Power of Attorney: A party may dispute the scope of the POA, arguing that the agent exceeded their authority or that the principal did not intend to grant certain powers.
- Allegations of breach of fiduciary duty or abuse of authority by the agent: A party may allege that the agent is misusing or abusing their authority, such as by making unauthorized transactions or decisions that are not in the best interest of the principal.
- Allegations of fraud or undue influence. A party may allege that the power of attorney is invalid because it was obtained fraudulently or through the exercise of undue influence by one or more persons.
- Disputes over the revocation of the Power of Attorney: A party may dispute the revocation of the POA, arguing that the principal was not capable of revoking it or that the revocation was not validly executed.
These disputes can often be complex and require legal expertise to resolve. It’s important to consult an attorney experienced in power of attorney litigation to help navigate the legal process.
Situations in which power of attorney abuse is commonplace
All too often, cases related to power of attorney abuse arise in the context of undue influence. Undue influence is when a person subverts the free will of another through the exercise of coercion, physical and/or mental abuse, and manipulation. A person having a close, confidential relationship with the victim is ordinarily in a position to exercise power over them. When this power is abused, it may require a lawsuit by the victim or the victim’s family to remedy the harm caused.
In this firm’s experience, power of attorney abuse occurs more regularly in the following situations:
- The Helpful Adult Child. When an adult child moves in with an elderly or sick parent for the purpose of providing care, especially when the parent’s other children live far away and do not have many opportunities to interact with the parent. In these situations, the adult child will normally justify their actions by indicating that they “were the only one who cared for him/her” or that “he/she wanted me to have everything because I was the only one who loved them.”
- The Lonely Victim and Selfless Neighbor. When an elderly person lives alone and does not have close family members, either because they are estranged or deceased. The elderly person is lonely and seeks companionship from friends or neighbors. As the elderly person grows older, experiences physical infirmities, or begins losing their mental acuity, those friends and neighbors step in to help. Unfortunately, they recognize the vulnerable state of the individual and know that, without close family members looking over their shoulder, no one will be there to see what they are doing. They have the victim execute wills and powers of attorney which are then used to transfer the victim’s property to the wrongdoer, the wrongdoer’s family, and – to avoid the look of total impropriety and to throw off the scent in case anyone comes looking – to one or more charitable organizations. When confronted, they, too, will profess that the victim wanted to give everything to them as a reward for their many selfless acts of love and affection for the victim in the absence of their family which callously abandoned them.
Of course, power of attorney abuse comes in all shades and stripes. Regardless of the victim’s situation, however, it’s rare when the power of attorney abuse occurs without the existence of one or more warning signs.
What are the warning signs of power of attorney abuse?
Because power of attorney abuse often occurs because of an agent exercising undue influence over the principal, the warning signs that a power of attorney document is being misused are largely the same signs indicating the existence of undue influence, generally. These signs include:
- Isolation from friends and family: The victim is cut off from their support network and only has contact with the person exercising undue influence. Many times, this person will have the victim execute a power of attorney document granting them wide authority to conduct financial and other transactions on the victim’s behalf.
- Fear and intimidation: The victim is made to feel afraid or intimidated by the undue influencer and is controlled through fear. The victim will then execute the power of attorney document because they are scared not to.
- Loss of autonomy: The victim’s decision-making ability is taken away, and they are not allowed to make their own choices. The agent will prevent the victim from accessing their financial accounts or otherwise conducting their own affairs. Meanwhile, the agent will use the power of attorney to their own advantage by transferring money to themselves from the victim’s accounts or purchasing items using the victim’s credit cards.
- Unusual behavior: The victim’s behavior changes dramatically and they become more compliant or submissive, especially in the presence of the undue influencer. The person exercising undue influence will use this compliance in forcing the victim to name them as their agent in a power of attorney document.
- Financial exploitation: The person exercising undue influence gains control over the victim’s finances and uses them for their own benefit. Once the victim grants the undue influencer authority pursuant to a power of attorney document, they can add themselves to the victim’s bank accounts, transfer money, write checks, apply for credit cards, sell property, and otherwise have unfettered access to the victim’s assets.
- Pressure to comply: The victim is pressured to comply with the undue influencer’s demands and may be made to feel guilty if they do not. This often occurs in cases where an adult child moves in with a victim to take care of them. The adult child makes the victim feel guilty for having “sacrificed” their work opportunities to care full-time for the elderly parent.
- Lack of privacy: The victim’s privacy is invaded and they are monitored constantly by the person exercising undue influence. The victim is therefore unwilling to speak out against the undue influencer out of fear of retaliation.
In addition to power of attorney abuse, undue influence may have other harmful consequences for the victim and their family. For example, the undue influencer may have the victim execute a will that gives them all their property after they die, thus necessitating a will contest by surviving family members to have the ill-begotten will declared null and void.
It’s important to remember that the signs of undue influence can be subtle and are not always obvious, so it’s important to be aware of these warning signs and to act if you suspect someone you know is a victim of undue influence.
How do I revoke a power of attorney?
A statutory durable power of attorney may be revoked at any time pursuant to Section 752.051 of the Texas Estates Code. Normally, this is accomplished by destroying the original power of attorney document and providing written notice of revocation to the agent and any third parties having knowledge of the power of attorney. To revoke the power of attorney, the principal must have sufficient mental capacity to understand that they are revoking it. Power of attorney litigation often arises when there is a question as to whether the principal has sufficient capacity to revoke a power of attorney.
Just as a person must have the requisite mental capacity to execute a power of attorney, they must also have the requisite mental capacity to revoke a power of attorney. If they do not, then they will not be able to revoke the power of attorney even if the agent has used his powers to steal money from the principal. In that case, a guardian will need to be appointed for the principal who can revoke the power of attorney on his or her behalf.
Who can initiate a lawsuit arising from power of attorney abuse?
Generally, the strongest power of attorney lawsuit is when the principal is still alive and has the requisite mental capacity to revoke the power of attorney, hire an attorney, and file suit against the agent who abused the power of attorney granted to them. In these instances, the principal can testify in court that the agent abused their powers; clearly describe the nature and extent of the agent’s wrongdoing and amount of any misappropriated funds; and state unequivocally that the agent did not have permission to carry out the actions that caused them harm. Additionally, the principal may elect to file criminal charges against the wrongdoer should they refuse to return the stolen funds. Because the best evidence is the unambiguous testimony of the aggrieved party himself, this firm’s experience has been that these cases have the highest probability of obtaining a favorable outcome.
In many instances, however, the principal is unable to testify on their own behalf, and efforts to recover misappropriated funds become more complicated.
One example is when the principal from whom funds were stolen lacks the mental capacity to revoke the power of attorney, understand the nature of the wrongdoing committed against him, and hire an attorney to do something about it.
Often, family members suspect that a loved one is being exploited by an agent pursuant to a power of attorney. Unfortunately, the concerned family does not have the power to revoke a power of attorney document for the principal. Instead, they must first apply to the court for guardianship over their loved one (who is referred to as the “proposed ward” in the guardianship pleadings). After being appointed, the guardian can then revoke the power of attorney, prevent further theft or financial exploitation by the agent, and take any actions necessary to recover damages for the proposed ward. For this reason, guardianship proceedings and power of attorney litigation regularly go hand in hand, and in many instances, the guardian or the guardian’s attorney will retain outside counsel to initiate the lawsuit against the responsible party.
Another example in which the power of attorney principal is unable to participate in the civil suit to recover misappropriated funds is when they are deceased. These cases arise when the wrongdoing committed using the power of attorney is discovered after the death of the principal, such as when the executor or administrator of their estate finds suspicious financial transactions after accessing the principal’s bank accounts. In this case, the executor or administrator for the estate would be responsible for initiating any legal proceedings to recover misappropriated funds, often by retaining a lawyer on behalf of the estate tasked specifically with filing suit.
Because a principal who is mentally incapacitated or deceased will be unable to provide evidence in the lawsuit, these cases are more difficult to prosecute. Although the financial records may indicate the existence of suspicious transactions or seemingly explicable expenditures, this firm’s experience is that the accused will almost always fall back on the excuse that they were acting with the principal’s knowledge and consent, and that the questionable financial transactions were a gift, reward, salary, or payment made in exchange for providing care or services to the principal. Though success in these cases is still possible, they are far less of a sure thing and a thorough evaluation by an attorney with experience in power of attorney litigation should be made prior to initiating legal proceedings.
Lawsuits related to power of attorney abuse are a very specialized form of litigation. The Aldrich Law Firm, PLLC’s attorneys have represented victims of power of attorney abuse and their families in San Antonio, the surrounding counties, and all across Texas. If you or someone you love has been harmed by someone abusing the authority granted to them via a power of attorney document, please do not hesitate to contact us for a consultation to discuss your case and go over your options.