|William F. Galvin, the secretary of state, wants to spell out rules for caring for seniors’ finances so the money isn’t misused.|
Galvin moves to protect elders’ interests
Bill would clarify responsibilities of power of attorney
It’s a scene occurring more frequently as the elderly population swells: bank accounts and other savings are looted by the very person seniors have entrusted to watch over their affairs with a power of attorney.
Massachusetts doesn’t regulate power of attorney — a signed, notarized letter of appointment is the only requirement — and advocates for the elderly say the absence of oversight makes it too easy for an unscrupulous person to exploit the position for personal gain.
Now Secretary of State William Galvin aims to remedy the problem with a proposal he submitted to the Massachusetts Legislature earlier this year that would bar people with power of attorney from enriching themselves or otherwise abusing their authority. The legislation would clarify that those wielding power of attorney must act in good faith and, most importantly, for the first time establishes that they have a fiduciary duty to the people they represent to act solely in their best interest.
Right now that code of conduct exists in the spirit of the law but isn’t explicitly spelled out, Galvin and the bill’s other proponents said.
“The real problem here is self-dealing on the part of the holder,’’ said Galvin. “There is no guarantee in the current law that requires power of attorney be used for the benefit of the individual who gave it. There is no real recourse if it is abused.’’
Seniors typically ask a relative or longtime family lawyer to hold power of attorney, although the position does not require any legal expertise. Instead, it is intended to help make life easier for people as they age and become more frail; most commonly the proxy is given access to the senior’s bank accounts in order to pay bills and conduct other financial management.
There are two types: durable power of attorney means the proxy’s authority remains in place if the senior is incapacitated and can’t make a decision on his own; otherwise, power of attorney is void if a person becomes incapacitated.
People can also withdraw the appointment as simply as they assign it — through a notarized, signed letter.
Though statistics are hard to come by, Galvin said incidents of financial abuse are on the rise — possibly caused, in part, by the combination of an increasingly older population and tough economic times, he suggested.
Of some of the approximately 20,000 reported cases of elder abuse in Massachusetts annually, about 16 percent involve financial issues, including situations involving power of attorney, said Al Norman, executive director of Mass Home Care, a statewide network of nonprofit organizations that advocates for seniors.
“Financial exploitation is one of the fastest growing components of elder abuse in Massachusetts,’’ said Norman.
“It’s not just a little problem tucked away in a corner. Families are stressed. People are losing work. People have mortgage problems. It’s just very tempting to dip into your parents’ nest.’’
The proposed rules may not help authorities identify abusers, but they would supply courts with a clear standard when reviewing estate settlements, said Michael Christy, a Worcester lawyer who is vice chairman of the Massachusetts Bar Association Probate Law Section Council.
Often, family members discover suspicious cash withdrawals or other assets missing when they prepare an accounting of the estate of a deceased elder for Probate Court, Christy said. But it is hard to prove that the person with power of attorney wasn’t acting within the confines of his authority, Christy added.
Under the proposed rules, courts could audit decedents’ accounts while the power of attorney was in effect and determine whether anyone benefited unduly.
“The legislation would put some teeth behind power of attorney,’’ said Christy.
“Any time there is a relationship based on trust, that trust can be abused. As the number of folks retiring and relying on power of attorney increases as the baby boomer generation ages, the potential for more abuse is increasing.’’
Judge Paula Carey, chief justice of the state’s family and probate courts, said she’s seen families torn apart by arguments among siblings and other relatives about whether someone wrongly benefited while holding power of attorney.
But while Carey supported Galvin’s idea in theory, she said that she wasn’t sure how the new rules would work in practice. Under existing law, she said, courts can hear allegations that someone has committed fraud, larceny, or other crimes while exercising power of attorney.
The new rules would give the court more guidance, but the onus would still be on the accusers to prove their case.
Carey also suggested authorities educate elders about when to use conservatorships instead of power of attorney. Conservatorships include the authority to manage someone’s finances, she said, but conservators must file annual reports to the courts detailing their transactions so judges can hold them accountable. People seeking more oversight could choose to establish a conservatorship.
Supporters of Galvin’s proposal said the new rules would at least provide more guidance to those helping elderly relatives manage their affairs. As it stands now, said Norman, too many people mistakenly think power of attorney comes with no strings attached.
“This kind of legislation is erring on the side of caution, to make people understand power of attorney is not just a piece of paper you sign,’’ said Norman. “It’s a commitment to the elder that you are truly going to represent their best interests, not what’s in your best interest.’’