Forged Power of Attorney Highlights Risks — and the Importance of Choosing the Right Agent

One of the most common questions we receive is whether a Power of Attorney should become effective immediately or only “spring” into effect upon incapacity.

There are good reasons why someone might prefer either approach. An immediately effective Power of Attorney allows an agent to step in quickly when assistance is needed, even if the principal is still capable but simply unavailable or wants help managing day-to-day affairs. A springing Power of Attorney, on the other hand, delays the agent’s authority until a specified event—typically the principal’s incapacity—which can provide some individuals with additional peace of mind.

Like many estate planning decisions, there is no one-size-fits-all answer. The right approach depends on your personal preferences, family dynamics, and overall planning goals.

What is often overlooked, however, is that whether a Power of Attorney becomes effective immediately or only upon incapacity is usually not the most important decision. The far more significant question is who you choose to serve as your agent.

A recent decision by the Court of Appeals of Virginia illustrates exactly why that choice matters.

Harwood Case

As reported by Virginia Lawyers Weekly, the Court of Appeals of Virginia decided Harwood v. Chinchilla, a case involving a Power of Attorney that had been fraudulently altered after it was signed. The property owners had granted their brother-in-law limited authority to lease and manage certain real estate. Without their knowledge, however, he replaced the first page of the notarized document with one that dramatically expanded his authority to include borrowing money and refinancing property.

Using the altered document, he obtained a $750,000 loan secured by one of the owners’ properties.

When the fraud was eventually discovered, the Court held that the lender bore the legal risk of relying upon the forged Power of Attorney and the property owners were not entitled to recover certain payments they had voluntarily made to prevent foreclosure.

The case serves as an important reminder that while Powers of Attorney are among the most useful estate planning documents, they also carry significant responsibility.

The Real Risk Isn’t Usually Forgery

While Harwood involved an altered document, most cases of Power of Attorney abuse do not involve forgery at all.

Instead, the more common situation is that the agent was properly appointed but later abuses the authority that was legitimately given to them. An unscrupulous agent may make gifts to themselves, transfer assets, misuse bank accounts, or otherwise place their own interests ahead of the principal’s.

Although the law provides remedies for breaches of fiduciary duty, recovering assets after the fact can be expensive, time-consuming, and, in some cases, impossible.

The best protection is thoughtful planning before problems arise.

Reducing the Risk of Abuse

No legal document can eliminate every possibility of wrongdoing. However, careful planning can significantly reduce the risk while preserving the flexibility that makes a Power of Attorney such an effective tool.

• Choose Character Over Convenience

The single most important decision is selecting your agent.

The best choice is not necessarily your oldest child, your closest relative, or the person who lives nearby. Instead, choose someone with unquestioned integrity, sound judgment, and the ability to place your interests above their own.

• Consider a Professional Fiduciary

Sometimes the best person for the job is not a family member at all.

If family relationships are strained, your estate is particularly complex, or no individual seems well-suited for the role, naming a professional fiduciary may provide greater peace of mind. Professional fiduciaries are experienced in financial management, operate under strict legal and ethical duties, and provide an additional layer of accountability.

• Build in Accountability

A Power of Attorney does not have to rely solely on trust.

The document can require your agent to provide periodic accountings to another trusted family member, attorney, or accountant. Depending on the circumstances, appointing co-agents or requiring certain significant actions to receive another person’s approval may also be appropriate. While too many decision-makers can create inefficiencies, carefully designed oversight often strikes the right balance.

• Store and Share Your Documents Thoughtfully

Keep your original documents in a secure location and provide signed copies to the financial institutions and advisors who are likely to rely upon them.

Having an authentic copy already on file may make it easier for an institution to recognize an altered or fraudulent document.

• Review Your Documents Regularly

The person who is the right choice today may not be the right choice ten years from now.

Marriage, divorce, financial difficulties, health issues, or changing family relationships are all good reasons to revisit your Power of Attorney and confirm that it still reflects your wishes.

• Remember What Really Protects You

Many people assume that a springing Power of Attorney is automatically safer than one that is immediately effective.

In reality, once a springing Power of Attorney becomes effective, the agent generally possesses the same authority. The true protection is rarely found in delaying the authority—it comes from choosing the right person, carefully defining their powers, and building appropriate safeguards into the document from the beginning.

The Bottom Line

The lesson from Harwood is not that people should avoid Powers of Attorney. Quite the opposite.

A well-drafted Power of Attorney remains one of the most important estate planning documents you can have. It allows someone you trust to manage your affairs if you become unable to do so yourself, often avoiding the need for a costly and time-consuming court-appointed conservatorship.

The key is ensuring that your Power of Attorney is thoughtfully designed, regularly reviewed, and entrusted to someone worthy of the responsibility. When those elements come together, a Power of Attorney provides not only legal authority, but also confidence that your wishes will be carried out when you need help the most.