EFFECTS OF FRAUDULENT MISUSE OF POWER OF ATTORNEY

A Power of Attorney is a written document that authorizes a person, generally an agent or lawyer, to act on behalf of another person known as the Principal in all issues.

CHAMAN LAW FIRM

6/13/2022 3 min read

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EFFECTS FRAUDULENT MISUSE OF POWER OF ATTORNEY

A Power of Attorney is a written document that authorizes a person, generally an agent or lawyer, to act on behalf of another person known as the Principal in all issues.

Just like other forms of Agency relationships a person to whom the power of attorney is given is obligated to obey the grantor's directives and operate in His best interests, He is also required to behave as a fiduciary if the grantor can no longer guide them either due to health crises or significant absence.

POA is subject to termination on the choice of the Principal, but this must be done when the Principal is mentally sane. POA may be General or limited in scope. Here are some of the POA:

1. POA is subject to termination on the choice of the Principal, but this must be done when the Principal is mentally sane. POA may be General or limited in scope. Here are some of the POA:

2. General: The agent is given the authority to make decisions regarding the principal's life until they die or become disabled, including all financial matters.

3. Durable: It is durable in the sense that it continues to work even if the person becomes incapacitated.

4. Limited: The principal grants the agent authorization that is limited in time or scope.

5. Springing: It takes action following a document-defined triggering event.

6. Medical: The principal authorizes the agent to make medical choices on their behalf, including those that are life or death.

Owing to the fact that a POA is not subject to judicial or third-party scrutiny, it is susceptible to abuse. Hence it is sometimes referred to 'License to Steal'. Misusing a power of attorney occurs when an attorney makes decisions or conducts acts that are not in the best interests of his grantor. Thus, personal gain derived while delivering a service, particularly to the prejudice of the principal, is fraudulent.

Misuse and abuse of POA includes:

1. Forgery

2. Fraud

3. Misappropriation

4. Theft

5. Personal gains

6. Breach of fiduciary duty (duty to act in another person’s best interest)

When fraud is identified, the Principal should respond quickly to protect his rights and minimize any potential financial loss.

Here are some of the legal claims available:

1. Claim for Illegal Conversion: A legal claim for Conversion can be made by a Principal. In this example, he shows that the agent used the principal's property in a way that was contrary to the principal's ownership rights. If this lawsuit is successful, the Principal may be able to reclaim his rights to his possessions or interests.

2. Petition for Conservatorship: Conservatorship is situation where a judge appoints a person as legal guardian over another person who is incapable of handling his own affairs either due to age or health disabilities. When Fraud is suspected by a relative of the Principal, then such a party may need to petition the court to have the principal placed under legal conservatorship. This action will revoke the power of attorney. However, the burden of Proof of incidence of Power abuse rests solely on the claimant, records or proof of Misuse of POA must be presented to be successful n such a claim.

3. A claim for breach of Fiduciary duty: any form agency relationship creates a fiduciary duty between the Agent and the Principal, in this instance the Attorney and the grantor. This relationship imposes the duty to act with utmost care and trust. Hence a Victim of misuse of POA can file a lawsuit on breach of Fiduciary duty.

4. Revocation of the POA to prevent further damage.

NB: This article is not a legal advice, and under no circumstance should you take it as such. All information provided are for general purpose only. For information, please contact chamanlawfirm@gmail.com

WRITTEN BY CHAMAN LAW FIRM TEAM

EMAIL: chamanlawfirm@gmail.com

TEL: 08065553671, 08024230080