Stop Relatives From Taking Money

Rachel Emma Silverman and Ashby JonesThe Wall Street Journal

Sadly, Brooke Astor is making headlines again. But there may be a lesson in the indictment of the late philanthropist's son and a lawyer close to the family's affairs: It can be risky to hand off financial responsibilities even to someone you think you can trust.

Estate lawyers say older people are often making use of a tool known as a durable financial power of attorney. This legal document authorizes an agent - usually a spouse, another family member, or a trusted adviser - to make financial decisions if you become unable to make them yourself. But naming someone to take control over your money has the potential for serious abuse.....

According to the indictment in the Astor case, made public Tuesday in Manhattan, Ms. Astor's son, Anthony Marshall, abused his power of attorney in order to "unjustly enrich" himself and others.

When setting up a power of attorney, you want to name an agent while you're still in good health and can make clear decisions. Typically, such documents are included as part of a standard estate-planning package, which also includes a will and health-care proxy giving an agent the power to make health decisions when you can't.

Another key point: Make sure to carefully lay out exactly what powers you want your agent to have. For instance, you can limit the agent's power to make gifts of your property, so they can't just give money to themselves. Spell out under what conditions gifts can be made, how much and to whom.

Lawyers say banks are increasingly scrutinizing power-of-attorney documents or are reluctant to honor them, because they fear being subject to suits alleging they unwittingly helped an account be drained by an improper agent.

A non-springing power-of-attorney document, meanwhile, goes into effect immediately upon signing. That can be useful in a case where an agent wants to immediately take control to stop, say, abuse by a neighbor or caregiver, without waiting for a doctor's declaration of incapacity. "You can go in and start safeguarding the assets right away," says John Pankauski, a West Palm Beach, Fla., lawyer who specializes in lawsuits involving power-of-attorney abuses. He adds that you really need to trust your agent to do a non-springing power of attorney.

Jeffrey Skatoff, a probate and estate-planning lawyer in Palm Beach Gardens, Fla., says his firm recently handled a case in which a grandchild with power of attorney had "looted" an account. "We got a guardian appointed, filed a lawsuit for conversion, and were able to set things right." In Florida, he adds, treble damages often attach to lawsuits alleging elder abuse. "So a civil lawsuit can be a powerful tool."

"Unfortunately, when people have authority over money, sometimes very bad things happen," says Mr. Pankauski, the Florida lawyer.

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