Power of attorney abuse in Texas can put a person’s savings and property at risk. A power of attorney lets a trusted agent manage financial matters. However, an agent may misuse that authority through unauthorized withdrawals, personal spending or improper property transfers.
What Is Power of Attorney Abuse?
Power of attorney abuse happens when an appointed agent uses the authority given to them for purposes that go against the principal’s interests or the instructions contained in the document.
The principal is the person who creates the power of attorney. The agent, also called an attorney-in-fact, acts on the principal’s behalf.
An agent may receive authority to handle banking transactions, pay expenses, manage investments, sell property, or deal with other financial matters. However, receiving this authority does not mean the agent becomes the owner of the principal’s money or assets.
Under Texas law, an agent generally has a fiduciary responsibility to act in the principal’s best interests, follow the applicable instructions, and handle the principal’s property appropriately.
Abuse occurs when the agent takes advantage of that position.
For example, an agent may use an older parent’s money to pay personal debts. Other warning signs include an unauthorized house transfer or spending retirement savings on the agent’s lifestyle.
These actions can amount to a breach of fiduciary duty and may expose the agent to civil liability. Depending on the circumstances, they may also involve criminal conduct.
Warning Signs That an Agent Is Misusing Funds
Power of attorney abuse is not always obvious. An agent may have legitimate access to financial accounts, which can make suspicious transactions difficult for family members to identify.
However, certain behaviours should raise concerns.
1. Unexplained withdrawals and transfers
Regular withdrawals that cannot be connected to the principal’s expenses may indicate that the agent is using the money for personal purposes. Large transfers to the agent’s own account deserve particular attention.
2. Changes in property ownership
An agent may attempt to transfer real estate, vehicles, or other valuable assets into their own name. Whether such a transaction is permitted depends on the authority granted in the power of attorney and the circumstances surrounding the transfer.
3. Unpaid bills despite available funds
If the principal has sufficient money but their mortgage, medical expenses, utility bills, or other essential obligations remain unpaid, the agent’s financial management should be examined.
4. Refusal to provide financial records
An agent who becomes defensive or refuses to explain transactions may be attempting to conceal improper activity. Although privacy and access rights can vary, an agent’s accountability obligations should not be ignored.
5. Sudden changes to financial arrangements
Unexpected changes to beneficiaries, account ownership, investments, or estate-related arrangements may warrant investigation, particularly when the principal is vulnerable or unable to understand the transactions.
One suspicious transaction does not automatically establish abuse. Nevertheless, repeated unexplained activity should not be dismissed, especially when substantial assets are involved.
What Does Texas Law Say About an Agent’s Responsibilities?
Texas takes the responsibilities of an agent seriously. Under Chapter 751 of the Texas Estates Code, an agent acting under a durable power of attorney has fiduciary duties to the principal.
These responsibilities include:
- Acting within the authority granted by the power of attorney.
- Keeping records of actions and decisions made on the principal’s behalf.
- Informing the principal about actions taken under the document.
- Providing an accounting when properly requested.
- Handling the principal’s property in accordance with applicable legal duties and instructions.
This means an agent cannot simply claim that their position gives them unlimited control over another person’s finances.
How to Stop an Agent Who Is Misusing Funds in Texas
Discovering that an agent may be stealing or misusing money can be upsetting, particularly when the person responsible is a close relative. However, delaying action can allow the financial damage to become worse.
The appropriate response depends on the principal’s mental capacity, the terms of the power of attorney, the nature of the suspected misconduct, and the urgency of the situation.
Here are important steps to consider.
1. Review the Power of Attorney Document
Before taking legal action, obtain a copy of the power of attorney and examine the authority it gives the agent.
Not every power of attorney grants the same permissions. Some allow an agent to manage bank accounts and pay bills, while others provide broader authority over investments, property, and financial transactions.
Pay attention to restrictions, special instructions, limitations on gifts, and provisions concerning property transfers.
For example, an agent may have authority to pay the principal’s household expenses but may not have permission to transfer the principal’s money into a personal account as a gift.
Understanding these limitations helps establish whether the agent has acted outside the authority granted.
2. Collect Financial Evidence
If you suspect financial exploitation, begin organising the available evidence.
Useful records may include:
- Bank statements showing unusual withdrawals or transfers.
- Copies of checks written from the principal’s accounts.
- Property deeds and documents showing ownership changes.
- Investment and retirement account statements.
- Receipts and records of expenses paid by the agent.
- Text messages, emails, or other communications discussing financial decisions.
3. Demand an Accounting From the Agent
An accounting can help reveal how the agent has managed the principal’s money and property.
Under Section 751.104 of the Texas Estates Code, the principal may demand an accounting from the agent. The accounting may cover property transactions, receipts, disbursements, liabilities, and other information necessary to understand the principal’s financial position.
A properly prepared demand can be an important step in establishing financial misconduct. However, where there is a risk of further losses, it may be necessary to pursue protective legal action without waiting for an informal response.
4. Revoke the Agent’s Authority Where Legally Possible
If the principal still has the mental capacity to make their own decisions, they may revoke the agent’s authority.
Revocation should be properly documented, and relevant financial institutions and other parties dealing with the agent should receive notice.
This is particularly important because certain transactions performed by someone who does not know that the authority has been terminated may still bind the principal under Section 751.134.
However, revocation becomes more complicated when the principal has lost the capacity to make that decision. A family member cannot automatically revoke a power of attorney simply because they disagree with the agent’s actions.
In those circumstances, a court may need to intervene to protect the principal and their property.
5. Seek Court Intervention
When an agent refuses to cooperate, continues misusing funds, or cannot be removed through ordinary revocation, legal intervention may be necessary.
Those who may bring an action include the principal, an agent, a guardian or other fiduciary, certain beneficiaries, relevant government agencies, and individuals who demonstrate sufficient interest in the principal’s welfare or estate.
Depending on the circumstances and the evidence, court proceedings may help secure an accounting, address improper transactions, terminate the power of attorney, or obtain other appropriate relief.
Legal action may also involve seeking recovery of misused assets or damages through an appropriate civil claim.
6. Report Suspected Financial Exploitation
Power of attorney abuse may extend beyond a private family disagreement. When an agent deliberately misuses money entrusted to them, the conduct may also raise criminal concerns.
Depending on the evidence and circumstances, an agent who intentionally, knowingly, or recklessly misapplies property in a manner involving substantial risk of loss may face criminal consequences.
Suspected criminal activity can be reported to law enforcement. Where an elderly or vulnerable adult may be experiencing exploitation, a report to the appropriate protective services agency may also be necessary.
How the Law Office of Udo Ezeamama Can Help
Suspecting that someone is abusing a power of attorney can leave families uncertain about what to do next. There may be concerns about losing more money, damaging family relationships, or making a decision that unintentionally complicates the legal situation. The Law Office of Udo Ezeamama can help individuals and families understand their legal options when an agent is suspected of misusing financial authority.
Every power of attorney dispute has its own circumstances. The right legal approach depends on the document, the principal’s capacity, the evidence of misconduct, and the extent of the financial loss.
Responding to Suspected Power of Attorney Abuse
Giving someone power of attorney requires a considerable amount of trust. Whether that person is a spouse, adult child, sibling, or longtime friend, the expectation is that they will act responsibly and protect the interests of the individual who appointed them.
Unfortunately, not everyone honours that responsibility.
An agent who uses another person’s savings, property, or financial resources for personal benefit is abusing a position that was created to provide assistance, not personal advantage.
If you suspect power of attorney abuse, you do not have to navigate the situation alone. Speaking with an experienced attorney can help you understand your rights, evaluate the evidence, and determine how best to protect the person and their assets. The Law Office of Udo Ezeamama can help you understand the legal steps available to address the situation and protect the principal’s interests.
For guidance on your circumstances, contact the Law Office of Udo Ezeamama.