Misuse of Power of Attorney Blog

A power of attorney is a legal document or an instrument giving a person (agent) wide powers to govern matters on behalf of another person (principal). A Power of attorney is a written authorization to act on behalf of another person in, business, private affairs or some other legal matter. The appointee can be granted with several rights, such as the right to sign a contract on your behalf, the right to handle your monetary transactions, the right to sell your property or any other legal right. According to Indian law, a poa is a legal document that has to be properly drafted using the right legal terminology with the objectives and responsibilities that you wish to authorize the attorney holder to pursue on your behalf.

Types of power of attorney documents:

A specific power of attorney gives the appointee very limited powers, to do a certain act, such as authority to sell property on the appointer’s behalf.
A general power of attorney serves the appointee with several rights and very broad powers, to execute any legal act on behalf of the appointer. This type of a Power of Attorney authorizes to perform bulk activities of appointer that he wants to perform.
A general or limited power of attorney expires when appointer becomes incapacitated. For a power of attorney document to be legally valid under Indian law, it must be exclusive in its provisions, properly stamped, executed and attested by a certified notary advocate. In a court of law, if there is a dispute concerning the scope of the power of attorney, the interpretation of the court is always strict.

Misuse of POA

A misuse of poa occurs when the agent on whom power has been vested by the principle, use such powers for the benefit for him. Whenever you grant a power of attorney to anyone, then you believe that such person will work for your benefit. But this is not always true sometime this bring disaster to some one’s life because this document gives immense power to the person or attorney bring a high causes or chances of fraud and misuse. Commonly this fraud or misuses are committed by attorneys. If the agent is taking actions beyond the power granted to him and not acting as per the interest of the principal or acting adversely towards the interest of principal but for the benefits of himself he is committing abuse of the poa’s.

There are usually four types of misuses committed by the attorney which includes financial misuse, medical misuse, breach of fiduciary duty and fraud forgery and identify theft.

Financial misuse may include embezzlement in the bank deposit, pension and social security of the principle and use of a power of attorney for investments purposes, financial transactions for the benefit of the agents. Buying and selling of assets in the name of the appointer is the common issue confronted in misuse and abuse of poa.

Breach of fiduciary duty means concealing the change and alterations in his/her financial state, medical, and other affairs , not asking and taking consent of the principle before making a profit from his finances or accounts, and not acting as per the interest of the principal.

Frauds, forgery and identify theft includes using the power of attorney status to open personal bank accounts without informing the principal’s ,purchase insurance policies and annuities in his name, buying expensive and personal stuffs using the principal’s credit cards, commit tax frauds, and be involved in unlawful and fraudulent activities in the principal’s name. In some cases the agent lied to the principle about the ware about of the transaction he is indulge into which bring evitable losses to the principal.

Consequences of misuse of power of attorney

The misuse of a power of attorney can bring up serious problems which resulted into financial harm to the principal. Sometimes the damage has been already done and the concerned person is unaware of the facts that the damage has been caused to him. Granting a power of attorney gives the holder power over your finance and property. If it comes to your knowledge that the agent is misusing the power vested in him, then you must immediately revoke it and consult a lawyer for help or advice and you can take help from government authorities and court for the recovery of your assets, property and money. A person who suffers this misuse can file a civil law suit against the agents and can claim for compensation and other related reliefs and can file a suit for the recovery of money and assets.