Editor's Note: This article is part of the Financial Advisor series "How I Solved It." Advisors describe a client with a problem and what they did to help.
People are living longer and may need help making decisions in the later stages of life, which can be accomplished by selecting someone to act as a durable power of attorney (POA).
But not everyone knows how much real power that can transfer to the designated POA and how financial advisors may be drawn into the situation.
Ephie Coumanakos, co-founder and managing partner of Wilmington, Del.-based Concord Financial Group has a client who knows firsthand the problems that can arise from assigning someone to be power of attorney without thoroughly vetting the person.
“In this case, my client called me on my cell phone on a holiday. She was in a panic because she thought her power of attorney, who was a family member, had stolen her money,” said Coumanakos. “She came in to the office the next day and we looked into the details.”
Luckily for the client, she and Coumanakos had a good relationship that dated back several years so that the client felt comfortable reaching out to and confiding in Coumanakos.
The client’s money was not gone, but the POA had transferred the accounts to different financial institutions. He also had changed the notifications from being delivered by mail to the retired woman client, to being delivered electronically to the POA.
He also wanted her to sell her home and move into a retirement home, although, at that time, the client was not incapacitated and she was still able to handle most of her affairs.
“Even though the client was still capable, the POA took his authority to extremes,” Coumanakos said. “In this case, the POA did not steal any money, but this is an important story because people do not realize how much power they are giving up when they appoint a POA. The actions being taken by the POA don’t even have to be malicious, let alone illegal, but the actions are not what the person wanted.”
It took two months to assign a new POA, another family member who was more understanding, and to bring all the assets back to where the client wanted them,