REMEDY FOR ABUSE OF POWER OF ATTORNEY IN LOUISIANA
“A wise man should have money in his head, but not in his heart.”
Although there are no absolute guarantees that long term financial plans will be carried out exactly as directed, a new law in Louisiana now provides much-needed protection to family members, in the event that they fall victim to financial abuse at the hands of a designated “agent” under a Power of Attorney.
Take the financially comfortable father who died peacefully in his later years, survived by his wife and four children. Thinking ahead, he left everything to his surviving spouse, who in turn designated their oldest son as her “agent” to handle medical and financial decisions under a general Power of Attorney.
Then, things changed.
Friends and family noticed that the son’s financial situation suddenly improved. He started to take lengthy vacations with his mother. He purchased a nice car to take his mother to and from doctor appointments. He built a handicapped accessible addition to his house for her, and he started to bank an allowance for himself in payment for taking care of his mother. People previously close to his mother found themselves cut off from any communication with her, and were suspicious that the son was draining assets designated for his mother and siblings.
What’s the problem?
Suspicions are reasonable that the son may be abusing his authority under the General Power of Attorney. Neither the law nor the courts are naive about potential abuse. However, until very recently, family members had no direct remedy to address an agent’s (in this case, the son) abuse of power. Prior to a recent change in the law, only the principal (i.e., the mother, in our fact pattern) could bring a cause of action or complaint against her son. This posed a difficult situation, especially if the principal had reservations about using a child, or had diminished mental or physical capacity.
What’s the solution?
Act 2014, No. 356 (House Bill No. 1133), approved by Governor Jindal in 2014, creates a new cause of action entitled “Action to Review Acts of Mandatary.” In essence, the new Act allows a family member or other interested person to bring an action (lawsuit) to review the acts of the agent (i.e., the son, in our fact pattern) and to grant relief where there has been an abuse of power.
It should be noted that the new cause of action contains a “loser pays” feature, which is somewhat unusual for Louisiana law. Whoever wins the lawsuit can recover attorney fees, which should discourage frivolous lawsuits, as well as abuses of power given the higher stakes.
Higher Duty and Prevention.
A general Power of Attorney is not a license to spend. It is a binding legal document that places the agent in a fiduciary bond with the principal. “Fiduciary” duties require the agent to exercise the powers of attorney for the benefit of the principal. Specifically, this means the agent must (among other things):
- Hold the principal’s interests separate from his/her own.
- Act and decide with reasonable caution and prudence.
- Maintain full and accurate records of financial transactions.
Mental and physical frailty opens the door for those who place their own interests above those of the principal, so be aware of the potential for abuse and watch for signs. If you have reason to believe a family member is the victim of financial abuse, consider the following steps:
- Determine the victim’s needs and wishes and his/her competency in continuing the relationship with the power of attorney.
- Contact supportive agencies like the Office of Aging and Adult Services.
- Utilize the new law and file an Action to Review Acts of Mandatary.
Theus Law Offices provides a complete range of estate planning services, including wills, trust, powers of attorney, probate, successions, and estate litigation. If you are facing an estate planning issue or will contest and need a Louisiana estate planning attorney or probate lawyer in Alexandria, Lafayette, Lake Charles, Baton Rouge, New Orleans, Shreveport, Monroe, Central Louisiana, or elsewhere, let our estate planning lawyers and probate litigation attorneys help you.
Sometimes referred to as a Durable Special Power of Attorney, this type allows very specific decisions to be made by the agent.
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