How Minnesota agents slide from "just this once" to financial exploitation, and how to stop it before it starts
Most power of attorney abuse in Minnesota isn't committed by villains. It's committed by a son or daughter who started out doing the right thing and slid, one small decision at a time, into misusing a parent's money. If you're choosing an agent for your own power of attorney, or you've just been named one, that slide is the risk to plan for.
The idea comes from an unlikely place. In a recent Wall Street Journal essay, Columbia accounting professor Shivaram Rajgopal explains why he teaches Macbeth to CFOs: the play shows how a person who knows exactly what's right talks himself into doing wrong, again and again. I see the same pattern in families.
How does power of attorney abuse usually start?
Power of attorney abuse usually starts small, not with a theft. An agent reimburses themselves for gas, then pays a personal bill from the parent's account, then takes a "loan" they mean to repay. Each step feels justified. The second is easier than the first. By the time anyone notices, the accounts are tangled and the agent can't explain where the money went.
Here's how it typically looks. A daughter is acting as agent under her mother's power of attorney. She pays herself back for groceries she bought for Mom. Fair enough. Then for her gas driving to appointments. Then she covers her own rent one month because Mom always said she'd help if things got tight.
Two years later, her brother asks where $40,000 went. She doesn't have receipts. Some of the spending was legitimate. Some wasn't. She honestly can't tell which anymore.
Shakespeare captured this moment four centuries ago. After his second murder, Macbeth admits he's waded so far into blood that turning back would be as hard as pushing on: "I am in blood / Stepp'd in so far that, should I wade no more, / Returning were as tedious as go o'er." That's the agent in year two.
Why do good people misuse a parent's money as agent?
Most agents who misuse money know it's wrong. They cross the line because of pressure, not confusion: resentment over doing all the caregiving, a sibling who isn't helping, a personal financial crunch, or a belief that Mom "would have wanted" them to have it. Once the first compromise is made, admitting it feels more costly than continuing, so the pattern repeats.
Macbeth isn't confused either. Before he kills King Duncan, he lists every reason not to, and admits his only motive is "vaulting ambition." What tips him over is Lady Macbeth questioning his nerve.
In families, that push sounds different but works the same way. "You're the only one who does anything for her." "Your brother hasn't visited in a year." "She'd want you to be taken care of." None of it argues the transaction is right. It just makes hesitating feel foolish.
What does Minnesota law require of an agent under a power of attorney?
Under Minnesota Statutes section 523.21, an attorney-in-fact must keep complete records of all transactions entered into on the principal’s behalf. When exercising authority under the power of attorney, the attorney-in-fact must act as an ordinarily prudent person of discretion and intelligence would in managing their own affairs and must keep the principal’s interests utmost in mind. An attorney-in-fact who reimburses themselves for expenditures made on the principal’s behalf must render an accounting of the transactions. The attorney-in-fact is personally liable to any person, including the principal, for injury caused by an action taken in bad faith under the power of attorney or by failure to account when a duty to account exists
The Minnesota statutory short form power of attorney includes a notice to the agent, and the agent signs an acknowledgment that they've read and understood it. So "I didn't know" is a hard argument to make later.
Outside of reimbursement, an agent generally has to provide an accounting only if the principal asks for one or the document requires it. That's a gap worth closing in the document itself, which brings us to choosing well.
Misuse can also cross into criminal territory. Financial exploitation of a vulnerable adult is a crime in Minnesota.
How do I choose an agent who won't go down that slope?
Choose an agent for judgment and backbone, not because they live closest or are the oldest child. Then build guardrails into the document: require periodic accountings to a named person, such as a sibling or your CPA, spell out whether the agent can be paid or make gifts, and name a successor agent. Clear rules remove the gray areas where small compromises start.
The best agent is someone who will say no to family pressure, including pressure from their own spouse. Ask yourself: if a sibling leaned on this person to "help out" with your money, would they hold the line?
Most abuse lives in gray areas. Can my agent pay herself for caregiving? At what rate? Can she keep making the birthday gifts I've always made? If the document answers those questions, nobody has to talk themselves into an answer.
Requiring an annual accounting to a second person is the single most effective guardrail I add. People behave differently when they know someone will read the ledger.
What should I do if I've just been named someone's agent?
Keep every receipt and record from day one, and never mix the principal's money with your own. Before any transaction that benefits you or makes you hesitate, wait 24 hours and talk to someone with no stake in the outcome, ideally the attorney who drafted the document. Treat that hesitation as a warning, not something to argue yourself out of.
The 24-hour rule and the outside conversation come straight from Rajgopal's advice to executives. He also suggests writing your doubts down and dating them, so you can't quietly revise them later. That works just as well for an agent.
A few practical habits:
- Pay the principal's bills only from the principal's accounts.
- Never put the principal's money in your own account, even temporarily.
- If you reimburse yourself, note what, why, and attach the receipt.
- Keep a simple running ledger. A spreadsheet is fine.
That feeling of discomfort before a transaction is usually the most accurate signal you have. Listen to it.
What if I think an agent is already misusing a parent's money?
Start by asking for an accounting. In Minnesota, the principal can request one at any time, and the agent must provide one if the document requires it or if they've reimbursed themselves. If the agent refuses or the records don't add up, talk to an attorney about asking a court to step in, and report suspected financial exploitation through the Minnesota Adult Abuse Reporting Center.
Move quickly. The longer misuse goes on, the harder the money is to trace and recover. If your parent still has capacity, they can also revoke the power of attorney and name someone new.
Need Help With Your Power of Attorney?
If you need help getting your power of attorney in place or are ready for an update to one you already have, let's schedule a Legal Strategy Session online or by calling my Edina, Minnesota office at (612) 294-6982 or my New York City office at (646) 847-3560. My office will be happy to find a convenient time for us to have a phone call to review the best options and next steps for you to work with an estate planning attorney.
