Misuse of Durable Powers of Attorney

JULY 10, 1995 VOLUME 3, NUMBER 2

Durable financial powers of attorney have been with us (in Arizona) for over twenty years, and they have become a tremendously popular planning device. Durable powers of attorney are often intended to avoid the costly and embarrassing process of guardianship or conservatorship for an incompetent person. However, with the growth in use of durable powers has come an increase in misuse, abuse and outright theft from vulnerable adults.

The “durable” in durable powers of attorney is a relatively modern invention. Before the early 1970s, all powers of attorney automatically terminated with the death or incapacity of the grantor (the person giving the power). In 1973 Arizona became one of the first states to permit powers of attorney to survive disability. A power need only provide that it either survives the disability of the principal (grantor) or becomes effective upon disability. Today, the majority of powers are durable.

The very strength of the durable power of attorney is also its weakness. Although the problems associated with Court supervision in conservatorship proceedings are substantial, the Court’s involvement does help assure that abuse is minimized. And conservators must post a financial bond which can be used to replace stolen money.

In a recent survey by the American Bar Association, estate planning lawyers were asked whether they had seen abuse of powers of attorney. While most lawyers had serious concerns about such abuse, the suggestions made for dealing with the problem tended toward better education of consumers and more careful selection of agents rather than government regulation of powers of attorney. Unfortunately, the problem continues to grow and instances of abuse mount.

Arizona’s New Law on Powers of Attorney

Widespread abuse of powers of attorney has caused considerable consternation in Arizona in recent years. In each of the past several years, proposals have been introduced in the Arizona Legislature to make it more difficult to create powers of attorney, to make agents subject to some sort of accounting requirement, or to stiffen penalties for abuse.

This year, one small change was adopted. Beginning this week, all newly executed powers of attorney must be notarized and witnessed by someone other than the agent or the principal’s family members. This change may make it more difficult to abuse the trust placed in agents by grantors.

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