Financial scams targeting seniors are rapidly increasing. A growing number of these scams involve family members, relatives, or friends who steal money from an elder when the elder grants them a financial power of attorney. In these power of attorney scams, the family member or friend often claims the money was taken for safekeeping because the elder was senile or needed to be protected from making bad financial decisions. The elder may then lose their home, investments, or other money and property through this scam.
A power of attorney is a written authorization giving one person the legal authority to act for another person, in financial affairs. In the hands of someone trustworthy, a power of attorney can be an important tool to manage the finances of an elder who has become permanently or temporarily unable to handle their financial affairs. However, in the hands of a financial predator or a greedy family member, a power of attorney can be used to secretly steal money and assets, readily bypassing the normal safeguards employed by financial institutions.
The most common type of Power of Attorney used fraudulently is a Limited Power of Attorney or a Special Power of Attorney. This document transfers the legal right to manage specified funds you have assigned for investment to either the Trustee or asset manager. Once the Power of Attorney has been transferred, the person to whom it was given now has the power to access your funds at their discretion. If you are dealing with a con artist, you can color your money gone.
If you or a loved one plans to use a power of attorney, take steps to protect against this scam. Or, if you or a loved one has been scammed, act quickly to remedy the situation. Here’s how:
- Do not grant a power of attorney to anyone unless you know the person well and completely trust them.
- Do not release the power of attorney until it is needed. In the meantime, keep the signed power of attorney in your attorney’s office.
- If a power of attorney is needed, but you are later able to manage your affairs again, immediately take back the power of attorney.
- If the agent in a power of attorney transfers property into his/her own name, demand in writing the agent immediately return the assets and render an accounting.
- If the agent refuses to return the property, immediately contact an elder law attorney.
People with elderly loved ones, caregivers of seniors, and elders themselves can prevent or remedy these scams by learning how they work, what steps to take to prevent becoming a victim, and what legal claims are available in the event of a scam. Be Educated! Be Proactive!
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