Tuesday, September 04, 2007

"Powers of Attorney" Investigated in Series

On September 2, 2007, the Pittsburgh Post-Gazette began its publication of a series of special investigative articles by reporter Dennis B. Roddy focusing on powers of attorney -- specifically, the abuse that can occur in this powerful relationship by some agents who exercise their sweeping authority.

The series is called "
Courting Trouble". The first article, published on Sunday, was entitled "Courting Trouble: The document granting 'power of attorney' often leads to abuse".

Across the country -- and notably in Western Pennsylvania, where the number of vulnerable elderly has compounded the problem -- a simple legal document called a power of attorney is disrupting the ever-lengthening lives it was supposed to benefit.

A durable power of attorney, known less formally as a POA, allows people too busy, too old, too ill or too far away to designate an agent to take care of financial and property transactions. The POA may authorize an agent to pay bills, change documents, write checks, enter into contracts or buy and sell their house. The purpose is to help people unable to attend to their own affairs.

In most cases, it works. When it goes wrong, lives can be ruined, families torn apart and, wealth and savings lost in a mist of legal wrangling and dubious transactions.

"Once you give people unlimited authority, greed can overcome goodness," said Neil Hendershot, a Harrisburg attorney who has lobbied in the past for reforms in the law.

Precisely how many times powers are abused is unclear because no one knows how many power of attorney documents exist. No court requires that they be filed when created, and in many instances, abuses are never uncovered.

Sometimes it's hard to distinguish outright abuse from misunderstanding or incompetence. But motive ceases to matter when the result is chaos. * * *

The first article in the series provides case summaries, and then offers one in-depth case study, regarding potential abuse of powers of attorney. Various elder law attorneys, and an Orphans' Court Judge, are quoted.

I had talked with Dennis Roddy as he was preparing his investigative report in mid-July. He had read my previous postings on this Blog, including "Super Powers" Under Examination (07/02/07), and Financial Elder Abuse Cases in PA (07/12/07).

He included some of my comments in his first article.
The Pennsylvania General Assembly tightened the law governing powers of attorney in 1998. At one point, because of an earlier broadening of the statute in 1992, persons holding the power of attorney were permitted to make gifts to others, even themselves, in unlimited amounts from the assets of the people who had granted the powers of attorney. The Joint State Government Commission, a body that often drafts the legislation that finds its way through the state House and Senate, put together a bill that took away the power to make unlimited gifts.

At the time, Mr. Hendershot, who served on the government advisory committee that helped strengthen the original law, saw remaining openings for abuse after the hole was plugged on unlimited gifts.

"I said it even back then," he recalled. "Abuse will now occur in the area of retirement benefits and life insurance benefits." * * *

The second installment in the series was published & posted on Monday, September 3, 2007, entitled "Courting Trouble: How a rescue led to a financial mess".

Before he drifted into a fog of dementia brought on by a stroke, Jay Gordon lived almost anonymously in East Liberty with an elderly aunt. After she died, Mr. Gordon became a recluse in his row house along Stanton Avenue.

Few people came or went, save a handful that helped him with housecleaning and minor chores.

Then his money began to vanish.

Months after a friend intervened, using a durable power of attorney pulled off the Internet and signed at bedside, Mr. Gordon's finances would become a tangle of intrigue, a mysterious charity and an interstate test of wills as a judge attempted to force out the truth about where Jay Gordon's money had gone.

His story exemplifies the problem of what can occur when, even with the best intentions, a durable power of attorney is misapplied. * * *

I recommend a reading of both installments, despite a few technical flaws that appeared. These may result more from the readability & generalizations of newspaper journalism, than misunderstanding.

The powerful main points of the articles remain; and these likely will be appreciated by the reading public.

Update: 09/04/07:

A third article in the series by Dennis B. Roddy was posted online by the Pittsburgh Post-Gazette on Tuesday, September 4, 2007, at 8:40 am. It was entitled "Courting Trouble: Guardsman in Iraq finds wife sold house out from under him".

Two weeks before a Christmas spent in Iraq, Minnesota National Guardsman John Paul Kieser checked the inbox on his e-mail. One was a message from his wife, Dana, with a new address in Fargo, N.D.

"The remaining messages," Mr. Kieser told police, "were from family members to call immediately." * * *

Before deploying for active duty in Iraq, John Kieser did what the military routinely advises deploying soldiers to do: appoint an agent under power of attorney to handle his affairs in the event he became incapacitated.

On Sept. 11, 2005, Mr. Kieser filled out a military power of attorney. Like other powers of attorney, it grants sweeping powers to buy, sell, deposit, withdraw, and otherwise carry out financial and legal matters back home for people who can't be there. It mentioned the family home at 1821 Onacrest Court, in Maplewood.

"I thought I had precautions in place," Mr. Kieser said.

Military powers of attorney hold the same powers in any given state -- something often needed for military families that find themselves stationed around the country in the course of a career. Mr. Kieser's power of attorney was known as a "springing" power of attorney -- one that springs to life when a certain set of conditions are met. * * *

An "attorney-in-fact" is another term for the agent designated to act under power of attorney. In this case, John Kieser chose his wife of six years, Dana.

John Kieser was in Iraq on Aug. 11 of last year when his wife used the language of that power of attorney and declared that her husband was incapacitated. Three days later she closed out his individual retirement account at Pioneer Investments, taking more than $25,000 and sticking him with IRS penalties for the early withdrawal. From their Wells Fargo mortgage account she took $2,178.46. From a savings account at Putnam Investments, she withdrew the total -- $2,794.60.

On each of the checks, she signed his name, hers and next to it "POA" -- power of attorney.

All the time Dana Kieser was cashing whatever of his investments she could reach, John Kieser had no idea the power of attorney had been put into use. They continued to communicate.

It wasn't until December that he got word the house had been sold. * * *

Mr. Kieser, still on active duty, is now waiting for the courts to sort through the financial tangle.

"I believe things will be made right in a year or two in criminal and civil courts," he said. "My suggestion to others is to include two separate relatives as executors of a POA. As in my case, I should have included my father as co-executor of POA along with my wife. * * *

A final, fourth article in the series is anticipated.

Update: 09/05/07:

The fourth & final article in the series, entitled "Courting Trouble: Power of attorney safeguards tough to legislate", was posted by the Pittsburgh Post-Gazette also on Tuesday, September 4, 2007.

The author-reporter, Dennis B. Roddy, gave me permission to repost it full-length on this Blog; and I did so. See: "Final "Courting Trouble" Article on POA Abuse" (09/05/07).