Dear Quentin,
Shortly after my husband and I married, he discovered his mother had been using a power of attorney to withdraw thousands of dollars at a time from one of his bank accounts. She took $25,000. As his power of attorney, she had access to his emergency fund. The bank helped him move the remaining funds, and had him write a revocation of the power of attorney.
He also sent the revocation to his other financial institutions. He couldn’t close the bank account because his stepdad’s name is on the account, which was his mom’s idea. It’s interesting that she withdrew $25,000 by illegally using the power of attorney while her husband could have legally withdrawn it since his name is on the account.
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A few weeks later, she reminded him of her upcoming birthday and wedding anniversary. He wasn’t going to send an expensive gift after she took $25,000, so instead he sent a card and made a donation to a charity. She responded that a donation is appropriate when a person requests you do that, and that she prefers gifts.
Justifying her theft
When she stopped working years ago she cared for her own father, who contributed to her home expenses, and then she had an inheritance from him after he passed away, which she used to go to Italy, an Alaskan cruise and Ireland. (There were no trips to see her son, though he’s been flying to visit her all these years.) Those funds are gone.
They listed their home for sale last April, and it’s still listed. I’m guessing she justified the theft by thinking of it as borrowing from her son who owes her for the cost of raising him (she talks about how much she spent on him growing up and uses that as a reason he owes her all the time), and maybe thought she’d repay him when she sold the house.
There’s still the issue of the open account. We can’t close it because his stepdad’s name is on it, and he feels he needs to constantly check his accounts in case she somehow gets access and makes withdrawals. Someone suggested a credit freeze, but a friend recommended against that. Is there anything else you recommend we do to protect ourselves going forward?
Happily Married
Dear Happily Married,
Dial “M” for mother-in-law.
Ireland is a lovely place to visit, but as an Irishman, I’m obviously biased. It was the only good decision your mother-in-law made. The rest leaves a lot to be desired, including her belief that she should receive a gift rather than a donation. One woman’s life-threatening emergency is another woman’s trip to the hairdresser. The boundaries were unclear from the start.
A power of attorney has a fiduciary responsibility to put the interests of the benefactor before all else. Your husband could give his mother another gift for her birthday — a lawsuit. He could sue her for abusing her role as power of attorney. Fair warning: That could be costly and timely, and as she was a co-owner (assuming she was not just a co-signer) it may complicate things.
It’s time to redraw some boundaries and enforce them. Your husband should tell his stepfather to close the account and, if he refuses, he should take his name off the account. That should be relatively straightforward with most banks, as long as there are no outstanding debts. It will also help prevent your mother-in-law and her partner from running up debts in your husband’s name.
Typically, the opposite happens: Younger relatives take advantage of older ones. I have received many letters about elder financial abuse, particularly in relation to adult children hitting parents up for money or stealing from their parents’ bank accounts by persuading them to add their names as co-signatories (so they inherit the bank account after the parent dies).
I’m reminded of the case of Axton Betz-Hamilton, who discovered that the woman she trusted most was stealing her identity: her own mother. She received a copy of her credit report when she was 19; it was replete with fraudulent credit-card entries and credit-collection agencies. Axton won an award for her work on identity theft, and her mother even attended the ceremony.
There are ways to set ground rules for the relationship going forward: “What happened to the $25,000 in the bank account?” (She may obfuscate and claim ignorance.) Questions can be more powerful than explanations. After all, your husband is merely telling her that he knows what she did — he is not looking for explanations or justifications.
But acting like nothing happened sets a bad precedent.
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