A Power of Attorney (POA) is a powerful legal tool in New Zealand. It allows someone (the “attorney”) to act on behalf of another person (the “donor”) in personal, financial, or property matters. However, with this power comes the risk of misuse. Understanding the signs and prevention of abuse of POA is essential for protecting your rights and interests.
What is Power of Attorney?
Types of POA
There are two main types of Power of Attorney in New Zealand:
- Ordinary POA: This is used for specific purposes and becomes invalid if the donor loses mental capacity.
- Enduring POA (EPA): This type remains effective even if the donor becomes mentally incapable. It’s commonly used to ensure someone can manage affairs if they become unable to do so themselves.
Why is POA Important?
A POA ensures that your personal and financial matters are handled by someone you trust. This is crucial in cases of illness, travel, or incapacity.
What Constitutes Abuse of Power of Attorney?
Definition of Abuse
Abuse of POA occurs when the attorney acts in a way that benefits themselves rather than the donor. This can include:
- Misusing funds or assets for personal gain.
- Making unauthorized decisions.
- Failing to act in the donor’s best interests.
Common Types of Abuse
- Financial Exploitation: Using the donor’s money or property for personal benefit.
- Neglect: Failing to manage the donor’s affairs properly, leading to financial loss.
- Coercion: Forcing the donor to sign a POA against their will.
Signs of POA Abuse
Financial Red Flags
- Unexplained withdrawals from the donor’s account.
- Missing property or valuables.
- Sudden changes in financial documents or plans.
Behavioural Indicators
- The attorney becomes secretive about financial matters.
- The donor seems confused about their finances.
- The donor’s standard of living drops unexpectedly.
How to Prevent Abuse of POA
Choose the Right Attorney
Selecting someone trustworthy is the first and most important step. It’s best to choose someone with a clear understanding of your values and interests.
Set Clear Terms
Clearly define the powers and limits within the POA document. Be specific about what the attorney can and cannot do.
Regular Reviews
Regularly review your financial statements and property records. You can also appoint a third party to monitor the attorney’s actions.
Legal Safeguards
Consult a lawyer to draft the POA. Legal advice ensures that the document is clear, comprehensive, and includes clauses to protect against abuse.
What to Do if You Suspect Abuse
Immediate Steps
- Talk to the Attorney: Sometimes, misunderstandings occur. Clarifying the situation might resolve the issue.
- Involve Trusted Family or Friends: They can help assess the situation objectively.
Legal Actions
- Contact a Lawyer: Legal professionals can guide you on the best course of action.
- Report to Authorities: If you suspect serious abuse, report it to the police or the Office for Senior Citizens.
Revoke the POA
If abuse is proven, the donor can revoke the POA, provided they still have the mental capacity. Legal assistance is usually required for this process.
Protecting Vulnerable Individuals
Special Considerations for Seniors
Elderly individuals are often the most vulnerable to POA abuse. Regular check-ins and family involvement can prevent exploitation.
Role of the Family Court
In New Zealand, the Family Court can intervene if there’s evidence of POA abuse. They can remove the attorney and appoint someone else to manage the donor’s affairs.
Conclusion
Power of Attorney is an essential legal tool, but it must be used responsibly. Understanding the risks and signs of abuse helps protect you or your loved ones from potential harm. Choosing a trusted attorney, setting clear terms, and staying vigilant are key steps to ensuring that a POA serves its intended purpose. Always seek professional advice to create and manage a POA in New Zealand.
