Does the attorney in fact under Power of Attorney have to provide an accounting?

Answer 1

Yes. The attorney in fact should keep a monthly account showing expenses, income and copies of the cashed checks (this last part is important). An attorney-in-fact under a Power of Attorney is bound by statutory provisions that govern fiduciaries. If they have control over an elderly parent's finances they should be prepared to provide an accounting because they should have nothing to hide. The elder's bank statements should be made available as well as their checkbook so that siblings can monitor the money going in and the money going out and that none of it is being spent for personal use by the AIF. An AIF can be held personally liable for missing funds.

There is a common problem with "family" AIFs who do not take their position seriously nor do they perform in a business-like manner. A POA grants sweeping powers over all a principal's assets. Mishandling of funds can cause a loss of entitlements if the elder has more coming in than they are allowed and someone else is spending it. In many cases the AIF is doing their own shopping while they shop for the principal, combining personal purchases with purchases for the principal, paying their own bills from the principal's checking account or buying gifts "from" grandma for their own children. They should expect to get audited and a savvy family member can and should petition a court to order an accounting.

The AIF should keep copies of checks, bank statements, deposits, check registers, paid bills, receipts and note down petty cash amounts spent on weekly purchases. Anything an adult child does as their parent's AIF should be open for inspection by siblings who are looking out for their parent's best interest. With-holding information, being secretive and being resistant to questioning is reasonable cause for alarm.The laws that govern Powers of Attorney are changing to reflect an increase in the financial exploitation of elders. A good example is New York where changes were made in 2009.

Those changes include:

• A requirement that the agent also sign the POA document.
• Limiting the power to change beneficiaries and make amendments to trusts.
• Requiring the agent to maintain a record of all receipts, disbursements, and transactions entered into by the agent on behalf of the principal.
• Requiring the agent to make records available within a certain time period when requested by a co-agent, certain governmental entities, a court evaluator, a guardian, or a representative of the principal's estate.
• Special court proceedings to compel an agent to produce the record of receipts and disbursements and for various other purposes.
• A mechanism for forcing the agent to provide an accounting of the principal's assets and income.

Answer 2

Yes. An attorney in fact under a power of attorney should be prepared to provide an accounting of their activities performed on behalf of the principal. That is why an AIF should keep very accurate records and not co-mingle any funds or accounts. It is relatively simple for an AIF to use a single account for regular expenses thereby making a record of all the principal's money coming in and all going out.

If they suspect the AIF was wasting the principals assets they could request a court order to compel an accounting. An AIF has broad power over all the assets of the principal. Abuse of elders by AIFs is becoming a common problem and the authorities are paying more attention to that issue.