Tag Archives: Power of Attorney

POA Breach of Fiduciary Duty

A Power of Attorney Holder’s Breach of Fiduciary Duty

There is no question that a financial power of attorney holds what is called a “fiduciary duty” to act in the best interests of the grantor.   But what if that power of attorney holder breaches that duty and takes “mom’s” funds for herself?  What if her taking of mom’s funds caused mom to be disqualified from Medical Assistance (i.e. Medicaid)?  Can she be found liable?

An interested case in Indiana answered that quesion in the affirmative.

An Indiana appeals court rules that a woman breached her fiduciary duty to her mother when, among other things, she refused to cash out a life insurance policy in order to qualify her mother for Medicaid and later profited from the policy. Shaw v. Covenant Care Waldron Home (Ind. Ct. App., No. 73A04-1005-SC-317, March 2, 2011) (unpublished).

Joni Shaw admitted her mother to a nursing home. Ms. Shaw signed the admission agreement on behalf of her mother as her attorney-in-fact. Ms. Shaw applied for Medicaid on her mother’s behalf, but the application was denied due to a life insurance policy. Ms. Shaw refused to cash out the policy, and the Medicaid application was never approved. In addition, Ms. Shaw withdrew funds from her mother’s account and deposited them into her sole account. After her mother died, her brother, who was the beneficiary of the life insurance policy, gave her $8,000 from the proceeds of the policy.

The nursing home had an outstanding balance of $5,709.40, which Ms. Shaw refused to pay. The nursing home sued, alleging breach of contract and breach of fiduciary duty. It argued that an attorney-in-fact who breaches a duty to the principal is liable to third parties as though he or she were the principal. The small claims court found in favor of the nursing home, and Ms. Shaw appealed.

The Indiana Court of Appeals affirms, holding that Ms. Shaw breached her fiduciary duty to her mother. According to the court, because Ms. Shaw profited from refusing to cash in the life insurance policy and she transferred funds from her mother’s account to her own account, it was clear that Ms. Shaw was acting in her own self-interest to the detriment of her mother.

from www.elderlawanswers.com.

The interesting question from a Maryland point of view is what right does the nursing home have to sue the attorney-in-fact.  Can other interested family member’s sue on behalf of mom?  The answer to that question is “yes.”  However, court action will need to be started to give that family member standing to recover the stolen assets.

Maryland Power of Attorney – Part 2

Maryland Power of Attorney

Upon review of the new financial power of attorney statutory language for both the short and long form, there are many good aspects with the new provisions.  There are enforcement provisions in this new law.  Before, a bank could refuse to honor your power of attorney and there would be virtually no way to force the bank to honor your power of attorney other than jump through their unique requirements.  The agent must keep a record of all receipts, disbursements and transactions.  There are other requirements as well.  The execution requirements will change.  While there is bound to be much confusion when this is enacted on October 1, 2010, overall, this was a good move by the Maryland General Assembly and this a positive development for our seniors.  There are more safeguards into its use.  There more defined routes to attack misuse.  There is language that can be used to make this enforceable.

If you would like to know the background of why the new power of attorney laws are called “Loretta’s Law” please follow this link:


Maryland Power of Attorney

Maryland Power of Attorney

The Maryland General Assembly just passed and the governor signed into law sweeping new changes regarding Maryland financial powers of attorney (Maryland Uniform Power of Attorney Act – Loretta’s Law).  There are a whole host of changes including new execution requirements, new statutory language, enforcement provisions, financial agent disclosure and non-disclosure requirements, and agent record keeping responsibilities.  The new law goes into effect October 1, 2010.