As Woodland Hills residents begin the process of estate planning, one of the first issues that’s often brought up is who will act in their stead should they become incapacitated. This may often prompt some to assign a family member or friend with power of attorney. Yet handing over the right to make vital decisions on one’s behalf is not a decision that should be taken lightly. Whomever one chooses to have power of attorney is given great authority over his or her affairs. This could lead some to question exactly how far this authority goes.
Power of attorney is typically assigned to handle issues related to two important aspects of a person’s life: healthcare and/or finances. In the case of finances, the person to whom power of attorney has been given (typically referred to as an “agent”) has access to all of the financial resources of the principal (the person for whom he or she is acting). This includes assets such as:
- Bank accounts
- Real estate
- Investment portfolios
Given all of the financial power entrusted to him or her, one may think that an agent could easily misuse his or her principal’s assets. Such abuse has happened, particularly in cases where the principal is elderly. According to the MetLife Mature Market Institute, the total lost in cases of financial elder abuse in 2009 totaled more than $2.6 billion.
California does have laws, however, to help prevent this abuse. California Probate Code § 4231.5.c states that anyone acting under power of attorney could be held liable for up to twice the value of any assets the court decides were misused during the commission of his or her duty. Probate Code 4265 goes on further to say that an agent has no authority to make changes to the principal’s will.