A statutory durable financial power of attorney (“POA”) is generally an essential part of any estate plan. In fact, it may be the most important document since it is often the most powerful as it often gives the agent the authority to deal with all of your financial affairs, assets (most people grant general powers – not limited) during your lifetime.
Furthermore, although Texas law permits the POA to “spring” upon disability, it is generally recommended that the POA become effective immediately since it is often difficult to determine when there is mental disability. The mental capacity needed to sign a POA is greater than a Will due to the importance of using of assets on the principal (the one who signs the POA) during the principal’s life.
However, the world is not perfect and sometimes a “trusted” agent goes rogue. For example, married couples often name their spouse as their agent prior to any marital problems. Although the POA is revoked automatically upon divorce, it is recommended that the POA be revoked before it is too late. Furthermore, the most common elder abuse (which includes financial abuse) are by those who are closest such as a child of the principal. The greater the power, the more dangerous the abuse. As a result, sometimes it is necessary to revoke a POA and the following steps (in addition to other actions) should be taken:
- The principal should sign a Revocation of Power of Attorney before a notary public (so it could be recorded).
- The Revocation of Power of Attorney or Affidavit of Revocation should be recorded with the county clerk where the principal resides and in any county where the principal owns real estate.
- Notice should be sent by certified mail, return receipt requested to the agent that the agent’s authority has been terminated. A copy of the Revocation could also be sent to the former agent. Demand for the return of the original POA should also be requested of the agent.
- A copy of the Revocation of an affidavit that the agent’s authority has been revoked should also be sent by certified mail return receipt requested to each financial institution where the principal has assets or does business.
- Demand that the agent give an accounting of all actions the agent took on behalf of the principal while acting as agent.
- If the agent fails or inadequately responds to the request for an accounting, the principal can file a motion to compel with the court.
- If it appears the agent abused power, then the principal could consider a lawsuit for the agent’s breach of fiduciary duty, conversion, elder abuse, etc. If the agent took funds for his or her own benefit, it could even be a criminal act (the level of the crime rising with the amount taken).