Anyone who has signed a financial-incapacity document has to be squirming a bit over Brooke Astor's estate case.
Her son, Anthony Marshall, recently was convicted of stealing millions of dollars from Astor while she suffered from Alzheimer's disease before her death. Although the case largely centered on a contested will purportedly signed by Astor, other estate-planning issues also came into play.
One was a financial power of attorney signed by Astor that gave Marshall authority to direct her affairs if she became incapacitated - and the means to steal from her.
The episode provides a wake-up call for people who use financial powers of attorney. These legal documents can be highly effective in ensuring that someone else will be around to handle financial matters for you if you're alive but unable to do so - as in the case of mental incapacity.
A power of attorney can be as short as a page or much longer, depending on the detail desired. They're often included with a trust, will, health power of attorney (addressing medical issues) and other estate-planning documents.
For all the benefits of using a power of attorney to avoid a potential court-supervised conservator situation, there are pitfalls, too.
In particular, you need to trust the person whom you designate to act on your behalf. And you should make sure he or she is responsible, diligent and reasonably astute.
"They really are documents that people should pay extremely close attention to," says Steven C. Peck, an elder law attorney at Premier Legal in Los Angeles, California.
California state law includes civil and criminal penalties that could apply in cases of abuse, it's better to avoid all that by naming a suitable person to act for you - whether a spouse, relative, friend or professional adviser.
The Astor case might raise awareness of powers of attorney, like Terri Schiavo's terminal illness did for living wills, which specify one's wishes regarding life support.
The Astor case shows that without the power of third parties to review actions, these types of abuses can continue and will continue unabated.
Lawmakers are lobbying for the Uniform Power of Attorney Act, which has been adopted in five states. The act would provide for third-party reviews when a spouse, presumptive heir or someone else has reason to believe the designated "attorney" isn't acting properly. Someone could petition the court to review the person's conduct.
The act also addresses acceptance of powers of attorney by third parties such as banks, brokerages and title companies. As it is, such entities don't have to honor a financial power of attorney in many states. Firms might balk if a document is dated or suspicious for some reason.
Under the proposed act, if a power of attorney is presented in that state, then a third-party would have to accept it. A quick legal review could be requested if there's reason for any concern. or elder abuse.
The act presumes powers of attorney are "durable" and thus would remain in force after the person creating one becomes incapacitated, as is usually the intent. Also, it addresses portability by encouraging documents drafted here to be honored in other states, and vice versa. The act also cites various potential conflicts of interest and could be used as a guide by attorneys drafting these documents.
As the population ages and more people face incapacity, financial powers of attorney likely will become more prevalent.
To avoid courtroom dramas, it's smart to ponder how exactly you might want to use one, and with whom.
Contact Steven Peck's Premier Legal toll free at 1.866.999.9085 to talk to an experienced california elder abuse attorney and visit us on-line at www.premierlegal.org
