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A energy of attorney is utilized to delegate legal authority to one more person. The principal (the individual granting the power of attorney) offers the agent, also recognized as the attorney-in-fact, the authority to make legal choices on his/her behalf, which includes handling bank accounts, genuine estate, and other assets.

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The potential for fraud exists in every energy of lawyer arrangement, by means of self dealing, embezzlement, and unlawful gifting. In some circumstances, a energy of attorney holder will drastically deplete an estate, leaving the heirs of the principal with small or no inheritance. Other ways in which a energy of lawyer can be abused include altering beneficiary designations on life insurance coverage or annuities, and opening bank accounts with joint title or pay on death provisions in favor of the agent.

The creation of a power of lawyer can be challenged beneath the grounds of lack of capacity or that the creation did not comply with proper formalities. If a validly granted power of lawyer has been abused by the agent, grounds could exist to sue the agent for the return of embezzled house or for monetary damages. If the principal is still living at the time of the action, the principal can sue the agent straight. In many situations, the power of lawyer abuse is component of a broader pattern of elder abuse. If the principal has passed away by the time the energy of attorney abuse has been discovered, the principal's estate or the intended beneficiaries of the property might be capable to sue the agent for breach of fiduciary duty, tortious interference with estate planning, or a number of other causes of action.

Due to the prospective for abuse with a energy of lawyer, their use should be limited. A lot of persons making a energy of attorney will leave the instrument with the drafting attorney till the situations triggering the activation of the energy have been triggered, such as the incapacity of the principal.