How Misusing a Power of Attorney Can Lead to Exploitation

A general power of attorney is like a blank check and must be safe-guarded. If the power of attorney gets into the wrong hands, it can be used to wipe a person out. A mere forged signature can result in zeroed out bank accounts and transferred real estate.

Arizona law requires that an agent acting under a power of attorney act in the principals best interest. Here is the relevant statute:

A.R.S. 14-5506. Powers of attorney; best interest; intimidation; deception; definitions

A. Except as provided in subsection B of this section, an agent shall use the principals money, property or other assets only in the principals best interest and the agent shall not use the principals money, property or other assets for the agent’s benefit. An agent who violates this subsection is subject to prosecution under title 13 and civil penalties pursuant to section 46-456.

B. Any authority, the use of which is not in the principals best interest or is for the agent’s benefit including contracted for commissions, fees or other compensation shall be specifically identified in detail within the instrument or a written contract signed by the principal that is specifically identified by the instrument and be separately initialed by the principal and the witness at the time of execution.

C. If the agent acted with intimidation or deception as defined in section 46-456 in procuring the power of attorney or any authority provided in the power of attorney, the agent is subject to prosecution under title 13 and civil penalties pursuant to section 46-456.

D. A power of attorney executed by an adult who does not have capacity is invalid. In a criminal proceeding, the agent has the burden of proving by clear and convincing evidence that the principal had capacity. In a civil proceeding, if the party challenging the validity of a power of attorney on the grounds of lack of capacity proves by a preponderance of the evidence that, at the time the power of attorney was executed the principal was a vulnerable adult, the agent has the burden of proving by clear and convincing evidence that the principal had capacity. In a civil proceeding if the party challenging the validity of a power of attorney on the basis of lack of capacity does not prove by a preponderance of the evidence that, at the time the power of attorney was executed, the principal was a vulnerable adult, the agent has the burden of proving by a preponderance of the evidence that the principal had capacity.

E. A person who in good faith either assists or deals with an agent is protected as if the agent properly exercised the agent’s power regardless of whether the authority of that person as the agent has been terminated.

F. For purposes of this section:

1. “Best interest” means the agent acts solely for the principals benefit.
2. “Capacity” means that at the time the power of attorney was executed the principal was capable of understanding in a reasonable manner the nature and effect of the act of executing and granting the power of attorney.
3. “Vulnerable adult” has the same meaning prescribed in section 46-451.

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