New York Probate Lawyer Blog
Many court cases and commentaries have focused on the use and problems associated with a Power of Attorney. In New York Article 5, title 15 of the General Obligations Law contains the statutes regarding a Power of Attorney (GOL Section 5-1501 seq.). The Power of Attorney can be a useful means by which a person can designate an agent to help with financial matters. A Power of Attorney should not be confused with a Health Care Proxy which is provided for by Public Health Law Section 2981. A Health Care Agent is limited to only health care decisions.
The issues that arise with agents or attorneys in fact who are named to make financial decisions is typically two-fold. First and foremost is that the agent may abuse his power over another’s finances and either act in manner that is not in the principal’s best interest or act in a manner to take advantage of the power for the agent’s self-interest. The second issue that often arises is that the agent fails to make or keep an accounting of his actions and transactions. As a result, financial decisions and payments that may be well founded can appear to be suspicious because accurate records and receipts of the amounts and purposes for the transactions are not available.As can be expected, questions and disputes most often arise when the principal that the agent is acting for is either incapacitated or has died. When the principal becomes incapacitated there is really no one to check or oversee the matters that the agent is handling. Many times, an agent is a spouse or a child and the family relationships are not contentious. Thus, there is no abuse of the power and court litigation is not needed to resolve any disputes. However, when abuse occurs or family members do not trust each other, problems arise. These matters can appear in Guardianship Court proceedings under Article 81 of the Mental Hygiene Law (MHL). Pursuant to MHL Section 81.29 the Guardianship Court can revoke a Power of Attorney or Health Care Proxy.
Many disputes also are found in Estate Litigation. In these cases it is common that the decedent had appointed an agent during life. After the principal dies questions arise as to the manner in which the agent handled the decedent’s property. There are many instances where after a person dies or becomes incapacitated it comes to light that the agent had abused his powers and transferred the principal’s asset to himself or sold them for his own benefit.
In a recent case decided by Manhattan Surrogate Nora Anderson on July 21, 2015 entitled Matter of Barrett, an estate beneficiary claimed that a power of attorney was misused. Since the alleged wrongdoer was one of the estate executors, the complaining beneficiary was given leave by the Court to become a limited administrator for the purpose of having the executor provide an accounting of his activities as an agent.
Taking the above information into consideration, it is important that anyone acting as an agent or attorney in fact maintain and preserve a complete record of all agency transactions and the reasons they were entered into. Even where the actions appear completely appropriate, the agent has a duty to account. Also, if there are situations where an agent’s transactions may be questioned, it is a good idea to obtain the advice of legal counsel before entering into the matter. Sometimes, Court intervention may also be needed so that the agent does not incur unnecessary liability. The Court might appoint a Guardian for an incapacitated person and recognize the resignation of an agent.
I have represented many individuals who were involved with matters concerning a Power of Attorney. In some instances, I have assisted clients by having a Power of Attorney revoked by the Guardianship Court. If you have any questions regarding a Power of Attorney or a Guardianship or Estate matter, call me now for a free review.
New York City probate lawyer, Jules Martin Haas has helped many clients over the past 30 years throughout Brooklyn and Bronx Counties resolve issues relating to estate litigation and settlement in New York Probate proceedings. If you or someone you know has any questions regarding these matters, please contact me at (212) 355-2575 for an initial consultation.
Jules Martin Haas provides his clients and members of the community with a free monthly e-newsletter which contains articles covering a variety of legal topics including estate planning, financial matters and real estate. If you wish to be placed on the e-newslist, simply e-mail me at jules.haas@verizon.net. You can cancel receiving the newsletter at anytime.