Lillian is 82 years old and has lived with her adult son and daughter-in-law since her husband passed away three years earlier. Although she is still sharp mentally, physically she has become increasingly weak and frail. Because she no longer drives and it has become difficult for her to leave the house, she executed a Power of Attorney for Property, appointing her son as agent, to permit him to do routine personal business for her. The month after she executed the power, she noticed some withdrawals from her checking account that she had not made. Over time, the withdrawals became larger and more frequent, and her son began demanding she hand over her Social Security checks to him as well. Lillian is afraid to say anything to him, because he has become increasingly violent towards her, one time even twisting her arm when she was slow in handing over her check. She does not want to call the police, both because she does not want her son to face criminal charges and because she fears what he might do in retaliation.
In this scenario, Lillian has been the victim of financial exploitation, which may be defined as the misuse or withholding of an older person’s resources by trusted individual. Financial exploitation is a significant problem in Illinois. In 2008, nearly 6,000 cases were reported, and since fewer than one in every 13 or 14 cases is reported, the number is actually much higher. Financial exploitation can take the form of undue influence, deception, extortion, forgery, theft, and as in Lillian’s case, power of attorney abuse.
While the potential for abuse exists in every power of attorney arrangement, the elderly are the group most at risk to be victimized for a number of reasons: they depend on powers of attorney with greater frequency than the general population; there is less chance the abuse will be discovered because they are often socially isolated; and finally, they simply have fewer options when they are abused -many times they can not remain in their home without the assistance of the abuser. Given these reasons, the elderly are likely to be abused even when they are competent, and the danger of abuse rises significantly when they are incompetent.
Principal Protection. A number of changes have recently been made to the Power of Attorney Act in light of the potential for power of attorney abuse against the elderly and there are certainly steps that practitioners can take to protect their elderly clients. Public Act 96-1195 makes a number of changes to the Act that will significantly increase the protections afforded the principal. The first is a procedural change: interested parties are prohibited from acting as witnesses. The statute specifically lists those who cannot act as witnesses, including the operator of a facility such as a nursing home in which the principal is a patient. Requiring disinterested witnesses provides protections against undue influence, coercion, and fraudulent execution.
The second is a substantive change: it elevates the standard of care the agent is required to use in exercising his duties. Under the prior law, the agent only had to use “due care” to act for the benefit of the principal. Under the new law, the agent is required to use “good faith for the benefit of the principal using due care, competence and diligence.” As a result of this heightened standard of care, the agent must conform his actions taken on behalf of the principal to a higher level, resulting in better service to the principal.
A third major change that increases protections to the principal is that all agents are now under a duty to provide an accounting if requested to by the principal, representatives of named agencies, or a court. While under both the old and new law, all agents are required to keep a record of actions, under the old law, only the agents of an incapacitated principal could be asked to provide an accounting, and only if asked by the agencies named in the statute. The new law thus expands the level of oversight previously permitted only to incapacitated principals and provides it to all principals. Providing an accounting would identify unauthorized use, a protection for the often isolated elderly principal. Additionally, knowing they may be asked to produce an accounting may act as a curb on unlawful use by an agent.
A final area in which the legislature has increased protection for the principal is by expanding the level of court involvement. Under the new law, if the court finds the principal incapacitated, it can review the agent’s conduct and grant appropriate relief, including compensatory damages. The prior law did not provide compensatory damages. The new law also makes it clear that the section shall not be construed to limit other remedies available, which opens the door to additional means of recovery and should discourage wrongful use. The new law also adds that if the court finds the agent did not act in the principal’s best interest, the principal’s estate will no longer be required to reimburse the agent’s costs of defending the suit, and if an agency brings suit, the agent can be assessed legal fees and costs. Both of these provisions facilitate action against a self-serving agent.
Finally, the new law facilitates court action against the agent by increasing the venue options available to the principal. In addition to the forums specified in the old law, which were based on the agent’s location, the new law permits suit where the principal resides or where the principal owns real property. This will facilitate suit by the elderly who may have limited mobility.
Reason for Caution. While the new law provides multiple protections for principals, it also opens the door for abuse by suggesting a lowered level to “spring” a durable power of attorney. In arriving at this lowered level, the General Assembly contemplated two types of powers of attorney: general and durable. A general power of attorney goes into effect when executed but is automatically revoked if the principal becomes incompetent (under the premise that he or she no longer has capacity to consent to continued representation by the agent.) When this happens, the principal’s family must petition a court for an order appointing a guardian in order to continue to act on his behalf. Opening a guardianship is a court proceeding, involving added time and the expense of attorneys’ fees and costs.
In contrast to the general power, a durable power becomes effective when executed and stays in effect even if the principal becomes incompetent: the agent can continue to act for the disabled principal, and no guardianship is required. The Illinois General Assembly has consistently expressed their intention that the statutory Powers of Attorney be durable. This intention is also reflected in the Uniform Law Commission’s 2006 Uniform Power of Attorney Act, from which the General Assembly borrowed, in which the default rule is that power of attorney is durable unless it contains express language indicating otherwise.
While making powers of attorney durable makes sense logically, in practice, a significant number of principals do not want to surrender control over their affairs to an agent while they still have the capacity to act. As such, the Statutory Short Form Power of Attorney for Property in Illinois provides an option for a springing provision in a durable power: even though it is executed while the principal is competent, it does not become effective until a certain event, such as the principal’s disability. The prior Statutory Power of Attorney read “insert a future date or event during your lifetime, such as a court determination of your disability, when you want the power to take effect.” Because the term “disability” in the Power of Attorney Act was defined by reference to the definition of “disability” in the Article on Disabled Adult Guardianships in the Probate Act, it was presumed the determination was made in a guardianship proceeding. However, having a court make the determination of disability in the springing provision essentially undid the reason for having a durable power in the first place.
In order to prevent the need for a guardianship, with Public Act 96-1195 the Illinois General Assembly changed the springing provision to read “insert a future date or event during your lifetime, such as a court determination of your disability or a written determination by your physician that you are incapacitated, when you want the power to take effect.” While this new language prevents the problem contemplated, e.g., having to open a guardianship to spring the power, it opens the door to abuse by lowering the standard which springs it to a single physician’s determination of the principal’s incapacity.
There is a real possibility that without the court’s involvement, an agent could trigger the springing provision of a durable power and begin financially exploiting the principal while he was still competent. The guardianship statue provides protections against an erroneous determination of disability, which are lacking in the determination of incapacity made by a single physician. Under a guardianship proceeding, a petition is filed with the court, service is made on the alleged disabled person, who receives a Notice of Rights, notice is given to his nearest relatives who may wish to challenge the proceeding, and the judge may appoint a Guardian ad Litem to protect the interests of the alleged disabled person. Finally, a hearing is required at which the alleged disabled person is present, and the petition is granted only upon a showing of clear and convincing evidence.
 Illinois Department on Aging: Elder Abuse and Neglect Program Annual Report FY 2008, at: http://www.state.il.us/aging/1news_pubs/publications/ea-an_report2008charts.pdf). Financial Exploitation is also the most widely reported form of Elder Abuse. Id.
 Id. Financial Exploitation is also a growing problem: reported abuse increased 10.9 % from the prior year.
 Id. In 46% of the cases reported, financial exploitation is also associated with emotional abuse.
 Cascino, Mary D, Get Ready for the New Illinois Power of Attorney Act: A Sweeping Rewrite of this Important Act Creates New Statutory POA forms for Healthcare and Property that Better Protect Principals, Agents, and Third Parties, Ill. B.J., Nov. 2010.
 Act of July 22, 2010, Pub. Act 96-1195, (effective July 1, 2011).
 755 ILCS 45/3-3(d) (11) (effective July 1, 2011).
 755 ILCS 45/2-7 (2008).
 755 ILCS 45/2-7(a) (effective July 1, 2011).
 755 ILCS 45/2-7(c) (effective July 1, 2011).
 755 ILCS 45/2-7.5 (2008)(to be repealed July 1, 2011).
 755 ILCS 45/2-10(a) (effective July 1, 2011).
 755 ILCS 45/2-10(i) (effective July 1, 2011).
 755 ILCS 45/2-10(d) (effective July 1, 2011).
 755 ILCS 45/2-10(e) (effective July 1, 2011).
 755 ILCS 45/2-10(h) (effective July 1, 2011).
 The statutory purpose is the same in the original statute and the recent amendment: “[E]ach individual has the right to appoint an agent... but this right cannot be fully effective unless the principal may empower the agent to act throughout the principal’s lifetime, including during periods of disability....” 755 ILCS . 45/2-1 (2008) and 755 ILCS 45/2-1 (effective July 1, 2011).
 Cascino, Mary D., Get Ready for the New Illinois Power of Attorney Act: A Sweeping Rewrite of this Important Act Creates New Statutory POA forms for Healthcare and Property that Better Protect Principals, Agents, and Third Parties, Ill. B.J., Nov. 2010.
 Unif. Power of Attorney Act § 104 (2006) “A power of attorney is durable unless it contains express language indicating otherwise.”
 Unif. Power of Attorney Act § 109 (2006) (Comment) “Survey evidence suggests... that a significant number of principals still prefer springing powers, most likely to maintain privacy in the hope that they will never need a surrogate decision maker.”
 755 ILCS 45/3-3(d)(6) (2008).
 755 ILCS 45/2-3(c) (2008).
 While having both a guardianship and a power of attorney in place could raise the issue of who controls the ward/principal’s property, the Probate Act makes clear the Agent has priority. 755 ILCS 45/2-10(2008) (“absent a court order... the guardian will have no power with respect to any property subject to the agency.”).
 755 ILCS 45/3-3(d)(6)(effective July 1, 2011).
 755 ILCS 5/11a-8 (2008).
 755 ILCS 5/11a-10(e) (2008).
 755 ILCS 5/11a-10(e) (2008).
 755 ILCS 5/11a-8(e) (2008).
 755 ILCS 5/11a-10(b) (2008).
 755 ILCS 5/11a-11 (2008).
 755 ILCS 5/11a-3(a) (2008).