A Power of Attorney (POA) allows a trusted person to act as an "agent" on behalf of another in case that person, the "principal," becomes incapacitated and is unable to make financial decisions. Without a POA, the court may have to appoint a guardian. POAs are not only for the elderly. Young people can be stricken with incapacitating illnesses or be severely injured in accidents and thus require someone to handle their affairs. If a friend or relative has chosen someone as a POA agent, be alert to be sure that the power is not being abused.
Determine whether the principal granted the POA under "undue influence" by the agent. It could be that the principal was not legally competent to grant a POA.
Investigate if the POA agent moves the principal from a care facility to another where the care is not as good. If the principal lives at home, be sure that he has enough spending money, that all medications are up to date, that items have not been removed from the home and that all bills are being paid on time.
Examine the principal's checkbook to see if an unusual number of checks have been written to the POA agent. That person is permitted to be compensated, but too many checks may indicate abuse. Removing money from bank accounts, or closing bank or brokerage accounts and transferring the funds to the POA agent, probably signals misuse. Changing the beneficiaries of life insurance policies, or changing the title of property to benefit the agent, unless specifically directed in the POA document, is clearly misuse of the POA.
Demand an accounting if you have reason to believe there has been abuse. If the agent refuses to provide you with financial documents, consult an attorney. If you do receive an accounting and you have questions about the documents you received, take them to an accountant or an attorney for review.
Report misconduct. If the accounting reveals that there has been abuse of the POA, you may need to report the activity to the police. If the principal is able, he or she should revoke the power or attorney. Otherwise, a concerned party can apply to probate court to appoint a guardian who can petition the court to suspend or revoke the POA. The principal or his or her guardian can also sue the agent for damages.