When a cousin abuses a power of attorney, the damage lands twice: on your loved one’s well-being now, and on the estate and the inheritance later. If you suspect it is happening, the practical goals are to have your loved one revoke the power of attorney, to get the money and property back from your cousin, to contest the power of attorney and have the court set it aside if necessary, and to find some other way of helping your loved one manage their affairs.
A power of attorney hands your cousin real authority over money and property, and where large sums are involved and easy to reach, that authority is a temptation. Relatives most often abuse a power of attorney when the elderly person needs care and is physically disabled or mentally incapacitated. A financially abusive cousin can leave the estate, and everyone who expected to inherit from it, with nothing. That is why the choice of agent matters so much: if a relative is going to be named at all, it should be the one with a record of honesty who has earned the trust of the rest of the family.
What is considered power of attorney abuse
Abuse takes many forms, but most of it falls into a few patterns.
| Pattern | Examples |
|---|---|
| Redirecting what passes at death | Opening joint bank accounts and naming the cousin as beneficiary; buying life insurance policies naming the cousin; changing the beneficiaries on existing life insurance. |
| Real estate | Buying real estate with your loved one’s money and transferring title for the cousin’s benefit. |
| Gifts and self-dealing | Unauthorized gifts to the cousin; unauthorized gifts to other individuals and charities; self-dealing; outright theft of property. |
| Credit | Unauthorized use of your loved one’s credit cards; establishing credit in your loved one’s name. |
What can I do if I suspect my cousin is abusing a power of attorney?
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Ask your cousin to return the money or property
It may or may not work, but it costs nothing to ask. Some agents only intended to abuse the power of attorney for as long as they could get away with it. Once discovered, and facing a civil lawsuit or even criminal prosecution, they may decide to cut their losses and return what they took.
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Ask your loved one to revoke the power of attorney
The simplest step is to explain to your loved one that your cousin may be defrauding them and ask them to revoke the power of attorney in writing, ideally with a copy to you. It is worth following up to make sure your cousin no longer has authority over any of your loved one’s accounts or property.
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Bring a lawsuit against your cousin
Your loved one can contest the power of attorney in court by suing your cousin for breach of fiduciary duty, tortious interference or other causes of action to recover the embezzled funds or property. These cases are complex and time-consuming, and most people need a litigation attorney to see them through.
The difficulty is that although your loved one can revoke the power of attorney and sue, they are often too old and frail, and sometimes lack the will or the mental capacity, to bring a lawsuit. Many also feel sorry for the cousin and do not want a relative to get into trouble with the law.
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Obtain a guardianship over your loved one
Another option is a guardianship. Once appointed guardian, you can bring the lawsuit against your cousin yourself, on the same grounds, to recover the funds or property for your loved one and ultimately for the estate and its beneficiaries. The main downside is that your loved one may resent a proceeding that compromises their independence. Guardianship proceedings are complex and time-consuming, and most people need an experienced New York guardianship attorney to handle them.
Is abusing a power of attorney a crime? Can my cousin go to jail?
The conduct described above typically amounts to one or more of embezzlement, theft, identity theft, fraud and forgery. Even so, it is unlikely that your cousin will face jail time. Your loved one is unlikely to press charges against a relative, and the police tend to treat power of attorney abuse as a civil matter.
Reporting the abuse to adult protective services is likely to produce the same result, because those agencies also generally view it as a civil matter. The best route to actually resolving the situation is an attorney with experience in these cases. If other kinds of abuse are also present, however, you should report to adult protective services.
How can I prove that my cousin is abusing a power of attorney
The proof is in your loved one’s financial statements and property records. If your cousin is abusing the power of attorney, you will see transfers of money or property to your cousin, or unexplained cash withdrawals. Ask your loved one to show you those documents or give you access to them. If that is not possible, your attorney will know how to obtain them.
Why a power of attorney is so easy to abuse
If your loved one gave your cousin a power of attorney, it makes sense to look closely at the arrangement and perhaps ask for some financial records, just to be safe. A power of attorney gives your cousin authority over your loved one’s bank accounts, including withdrawals and transfers, the purchase and sale of real estate, the management of assets, stock and bond transactions, retirement plans and investments, and the buying and selling of assets generally. Where large sums of money and substantial assets are involved and readily accessible, the potential for fraud, self-interest and embezzlement is built into the document.
A power of attorney stays in effect until the person who made it dies, until it expires if it has an expiration date, until your loved one revokes it by written notice to your cousin, or until it is successfully contested and revoked by the court.
How much does it cost to hire a lawyer for this type of matter
Attorneys generally charge by the hour. Our firm charges $600 per hour and requires a retainer deposit of $4,000 to take on a case. No one likes spending money on lawyers, but if the alternative is that your loved one keeps suffering the abuse and your future inheritance keeps shrinking, the choice is usually an easy one. If you believe your cousin is abusing a power of attorney, call us at 212-233-1233 or email [email protected].
