A power of attorney is used to delegate legal authority to another person. The principal (the person granting the power of attorney) gives the agent, also known as the attorney-in-fact, the authority to make legal decisions on his/her behalf, including handling bank accounts, real estate, and other assets.
The potential for fraud exists in every power of attorney arrangement, through self dealing, embezzlement, and unlawful gifting. In some situations, a power of attorney holder will significantly deplete an estate, leaving the heirs of the principal with little or no inheritance. Other ways in which a power of attorney can be abused include changing beneficiary designations on life insurance or annuities, and opening bank accounts with joint title or pay on death provisions in favor of the agent. The potential for power of attorney disputes is large and can lead to lawsuits.
The creation of a power of attorney can be challenged under the grounds of lack of capacity or that the creation did not follow proper formalities. If a validly granted power of attorney has been abused by the agent, grounds may exist to sue the agent for the return of embezzled property or for monetary damages. If the principal is still living at the time of the action, the principal can sue the agent directly. In many situations, the power of attorney abuse is part of a broader pattern of elder abuse. If the principal has passed away by the time the power of attorney abuse has been discovered, the principal's estate or the intended beneficiaries of the property may be able to sue the agent for breach of fiduciary duty, tortious interference with estate planning, or a number of other causes of action.
In some situations, the ownership of joint bank accounts will be in dispute upon the death of one owner. Under Colorado law, there is a presumption that jointly titled accounts become the property of the survivor upon the death of the first owner. However, this presumption can be disproven upon sufficient evidence to the contrary. A joint account that is intended to be paid to the survivor is called a survivorship account. A joint account that is intended to be paid to the estate upon the death of the owner is called a convenience account.
In other situations, one owner of joint funds might have improperly transferred funds out of the joint account to another. In such a case, a lawsuit can be brought for the recovery of the joint funds improperly taken.
If you are involved in a dispute over a power of attorney or joint account, please call The Soignier Law Firm, LLC at (970) 247-3510, or email us.