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Power of Attorney Abuse in Maryland
by Jill A. Snyder, Esq.
Law Office of Jill A. Snyder, LLC

I.         Manifestations of Power of Attorney Abuse

    • Typically committed by relatives and caregivers, but also by opportunistic strangers who take advantage of an opportunity to exploit a vulnerable adult.
    • May be unintentional in instances where the agent does not understand her role and the duties owed to the principal.
    • Abuse of the agent’s authority may occur because agents typically have broad decision-making authority and act without court oversight or any other form of monitoring.
    • Abuse may occur regarding the creation of a power of attorney (“POA”) by forging the principal’s signature, having a principal sign a POA who lacks decision-making capacity, having an agent appointed by the principal as a result of undue influence, fraud, or misrepresentation by the agent.
    • Examples of an agent’s abuse of authority include:  making unauthorized withdrawals from the principal’s bank account, cashing checks that should have been deposited to the principal’s account, and threatening the principal that she will lose her home or her care if she doesn’t convey property or financial control of her assets to another person.

II.        Efforts in Maryland to Curb Power of Attorney Abuse

    • The Maryland General Assembly enacted the Maryland General and Limited Power of Attorney Act in 2010 which was designed to increase both the accountability of agents and acceptance of POAs by financial institutions.  This Act is also known as “Loretta’s Law” based on a woman whose niece stole $449,000 from her through the improper use of a power of attorney.
    • The new law helps to curb abuse by:

      1.  Requiring POAs to be notarized and requiring that the principal and the witnesses are together when the document is signed.
      2.  Allowing a principal, guardian, governmental agency, personal representative, or successor in interest of the principal’s estate to demand an accounting by the agent of receipts, disbursements, or transactions conducted on the principal’s behalf.
      3.  Enabling certain people to petition the court to construe a POA or review the agent’s conduct even if they are not authorized to demand an accounting from the agent.  This includes principal’s spouse, parent, descendant, heir, named beneficiary, caregiver, or person asked to accept the POA.
      4.  Prohibiting an agent from compensating herself from the principal’s funds unless the POA specifically provides otherwise and such compensation is reasonable.
      5.  Outlining the duties of an agent, and specifies which duties may be modified by the principal in the POA.
            a.  Duties that can be modified by the principal: avoiding a conflict of interest, acting loyally, keeping all records, and attempting to preserve the principal’s estate plan. 
            b.  Duties that cannot be modified by the principal:  acting with care, competence, and diligence in accordance with the principal’s expectations and best interest, and acting within the scope of authority granted by the principal.

III.      Non-Statutory Ways to Reduce the Potential for Power of Attorney Abuse

    • Hire an attorney to draft your POA because the attorney can help assess whether the principal has the capacity and is freely executing a POA, assist in the selection of appropriate people to serve as agents, explain safeguards that can be included in your POA to reduce the risk of abuse, educate your designated agent regarding her duties, and physically hold the original executed POA on behalf of the principal until it needs to be utilized.
    • Notify your family members and financial institutions that you have granted power of attorney to another person so that they can be on the lookout for unusual activity.
    • Add provisions in your POA to address the agent’s ability or inability to make gifts, commingle funds, change beneficiary designations, personally benefit, and receive compensation.
    • Consider adding a requirement in your POA that your agent must account to a third party on a regular basis.
    • Don’t sign a POA without understanding its contents and risks.
    • Don’t give authority over your assets to someone unless you have reason to absolutely trust that person and believe her to be capable of managing your assets.
    • If you wish to revoke an agent’s power, do so in writing and make sure that your family members and financial institutions are notified that you have revoked the agent’s power.

IV.      Ways to Reduce the Risk of Other Forms of Financial Abuse

    • Review your bank statements for unauthorized payments or withdrawals.
    • Use direct deposit for your recurring distributions such as social security and pension payments.
    • Don’t re-title your assets to another person or make another person a joint owner on your accounts.
    • Don’t sign blank checks for another person to fill in the amount.
    • Don’t give another person control over your ATM card.
V.        What to do if Financial Abuse Occurs

If you suspect that you or another vulnerable adult is being financially exploited, call the Maryland Department of Human Resources at 1-800-917-7383.  The Department will contact Adult Protective Services in the appropriate county to investigate.  You can also contact an attorney of your choice for advice regarding immediate steps to take to prevent further abuse.
For assistance with your estate planning needs, please contact the Law Office of Jill A. Snyder, LLC at (410) 864-8788
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