I recently received a phone call from a woman whose parents had been victimized and had lost their entire retirement savings to Nigerian con artists.
Con artists often target the elderly because isolation and declining cognitive ability makes them more vulnerable to fraud. Consumer Reports estimated that seniors and their families lose $3 billion to more than $30 billion to fraud each year.
Apparently, her parents had shared details of the scam with family members who all advised them not to send any money; however, her parents disregarded their advice and are now facing the consequences of their bad decision.
To prevent future fraud, the woman wanted her parents to sign a power of attorney. She said she wanted to require that all financial institutions dealing with her parents ask her permission before releasing any funds.
A friend had had told her that being appointed as an agent under a power of attorney would give her the authority to override the decisions of her parents.
A Power of Attorney allows the person creating it (called a principal) to appoint someone who can make financial decisions for them. However, signing a power of attorney will not restrict the principal from making financial decisions or conducting business for himself or herself.
As long as the principal has legal capacity, the agent will not have the authority to override his or her decisions, even decisions that the agent believes are harmful. In situations where there is a conflict between the principal and the agent and the principal is not mentally incapacitated, the principal’s decisions control.
For tips on how to protect the seniors in your life from being defrauded read: Tips for Preventing Elder Fraud.