Double Agent - When an Attorney-in-Fact goes rogue
This blog and other sites have already emphasized the importance of naming an trusted Attorney-in-Fact (AIF) trust under a Power of Attorney (POA). Instead of re-hashing that point, let's look instead at how to remove an AIF that has acted outside their authority.
The POA outlines AIF has and when those powers become effective. Some choose to have a springing power of attorney where the AIF receives power only at the time of the principal's incapacity; others have a POA effective upon execution. When checking to see whether an AIF has in fact overstepped their authority, always check the POA to make sure they have not actually been granted that power under the document.
An AIF can have their power revoked by the principal, provided the principal is competent, under the terms set out in the POA document. State law requires delivery of notice to the current AIF and requires the revocation be recorded.
If the principal is incapacitated, removing the AIF is harder. A guardianship proceeding may be instituted and, if the court determines the principal incompetent, the named guardian may then revoke the POA through the process outlined above.
The principal (or guardian) may also elect to bring an action against the AIF for breach of duty in an effort to recover losses.