Don't Give Power of Attorney to the Wrong Person

Jan. 5, 2009 — -- At 83, Betty Halligan had lived a long and happy life, but after her husband died she needed extra care.

Betty Halligan was suffering from dementia and diabetes, so her grandson Michael Halligan and his girlfriend Daphne Wood moved into her Spokane, Wash., home to help her out. Or so she thought.

Betty Halligan's son, Dick Halligan, and his wife, Gail Halligan, lived in another state. At first they were happy that their mom had help, but later they became concerned when they learned she had signed over her power of attorney to their nephew. Dick Halligan was convinced his nephew was stealing from his mother.

"We knew it was happening. We just couldn't convince the right people to let us step in and try to help," Dick Halligan said.

His mother was in denial, Dick and Gail Halligan said. She simply wouldn't believe that her grandson would steal from her.

"They had convinced her to sign the deed to the house over to them, with the thought that they would stay and take care of her for the rest of life," Dick Halligan said. "As soon as the deed came in the mail, they started the paperwork to get an eviction notice to get her out of the house."

With her life savings depleted and about to be evicted from her own home, Betty Halligan finally reached out to her daughter-in-law for help.

"Betty called me and she was whispering and she said, 'I need help.' She said, 'They are hurting me and they have taken all my money.' My heart just sank. She was so defenseless," Gail Halligan said.

The police got involved and discovered Betty Halligan was terrified.

"When I talked to Betty she was afraid they were going to kill her. She was really afraid," said Detective Kirk Kimberly of the Spokane Police Department.

Police raided the home and uncovered evidence that ultimately sent Michael Halligan and Wood to prison for more than two years. They were convicted of second-degree theft and forgery.

Betty Halligan witnessed her grandson's trial and later moved to an assisted living center, where she lived until she passed away in June.

"She was never the same after this," Gail Halligan said. "She died of disappointment and a broken heart."

How Does Power of Attorney Work?

When you sign over your power of attorney, you are giving someone else control over your finances in case you become incapacitated. Because you're allowing another person unfettered access to your bank accounts, retirement savings and home, you face major risks if you give that authority to the wrong person.

Sherry Parrish, the host of "Retirement Living TV" and the resident life director for Erickson Communities senior living centers, offers this advice about signing over your power of attorney.

Choose someone trustworthy and capable. Pick someone that you would trust with your life. You also need to make sure that you choose someone capable of carrying out the responsibilities that go along with having the power of attorney. This person should have good math and reading skills, be responsible about paying their bills and emotionally stable.

If you don't have family members you can trust, then find a trustworthy friend, neighbor or an advocate. Or find an impartial attorney who will not abuse the power in any way.

Consider joint power of attorney. You can give power of attorney to one person, but you can also grant joint power of attorney. This protects against one party taking advantage of you. Some people give one child power of attorney and make another executor of the estate. Power of attorney only lasts as long as you're alive. Afterward, the executor has control of the estate.

Make sure you have regular accounting sessions. Meet monthly or quarterly to check that your power of attorney is paying bills and not siphoning money.

Remember, this is business, not personal. It's not about love, it's about trustworthy financial stewardship on your behalf. Don't be afraid of being rude and don't be afraid to ask the tough questions. You must ask questions in order to protect yourself.

You can always revoke power of attorney. You may have had bad luck with your original decision, but there is no reason you have to stick with it. You can revoke power of attorney at any moment. If you're in a bad situation and don't know whom to turn to, call your local government's office on aging and it will steer you in the right direction.

Find out more at AARP.org