When your sister abuses a power of attorney, the consequences fall on your parent first and on your parent’s heirs second: your parent loses money needed for care, and the estate that would have passed to the family is drained.
If you suspect that your sister is abusing a power of attorney, the goals are straightforward. You want your parent to revoke the power of attorney, you want your sister to return the money and property, and if she will not, you want the power of attorney contested and set aside by the court so that someone else can look after your parent’s affairs.
A power of attorney hands the agent access to everything the principal owns. Where large sums of money and substantial assets are readily accessible, that access is a temptation, and children do sometimes abuse a parent’s power of attorney once the parent is physically disabled or mentally incapacitated and can no longer keep watch. A parent choosing an agent among the children should pick the one with a record of honesty who has earned the trust of the other siblings, because naming the wrong child is how these lawsuits start.
What Counts as Power of Attorney Abuse
Abuse takes a handful of recurring forms. The common thread is that the agent uses your parent’s authority for the agent’s own benefit rather than your parent’s.
| Type of abuse | What it looks like |
|---|---|
| Redirecting accounts | Opening joint bank accounts in your parent’s name and naming your sister as co-owner with right of survivorship or as beneficiary, so the balance passes to your sister at death outside the will. |
| Life insurance | Buying life insurance on your parent’s life with your sister as beneficiary, or changing the beneficiaries on existing policies. |
| Real estate | Buying real estate with your parent’s money and putting title in your sister’s name or otherwise for your sister’s benefit, or transferring your parent’s existing property. |
| Unauthorized gifts | Gifts to your sister personally, or to other individuals and charities, that the power of attorney did not authorize. |
| Theft and self-dealing | Outright taking of your parent’s property, and transactions in which your sister is on both sides of the deal. |
| Credit | Unauthorized use of your parent’s credit cards and opening new credit in your parent’s name. |
What Can I Do If I Suspect My Sister Is Abusing a Power of Attorney?
There are four practical routes, roughly in order of escalation: ask for the money back, have your parent revoke the document, sue, or seek a guardianship. Which one fits depends mostly on whether your parent still has capacity and is willing to act.
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Ask your sister to return the money or property
This 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, they may decide to cut their losses rather than face a civil lawsuit or a criminal complaint, and simply return the money or property in question.
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Ask your parent to revoke the power of attorney
The simplest step is to explain to your parent that your sister may be defrauding them, and to ask your parent to revoke the power of attorney in writing, with a copy to you. Revocation requires that your parent still have capacity. It is worth following up to make sure your sister no longer has authority over any of your parent’s accounts, which means the banks and other institutions must be told of the revocation.
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Bring a lawsuit against your sister
Your parent can contest the power of attorney in court by suing your sister for breach of fiduciary duty, tortious interference or other causes of action, to get the embezzled funds or property returned. These matters are complex and time-consuming, and most people need a litigation attorney to see them through.
The practical difficulty is that your parent, though entitled to sue, is often too old and frail, lacks the will to fight, or no longer has the mental capacity to bring a lawsuit. Parents also tend to feel sorry for the child and do not want her to get into trouble with the law.
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Obtain a guardianship over your parent
Where your parent cannot or will not act, the remaining option is a guardianship proceeding. Once you are appointed guardian, you can bring the lawsuit against your sister yourself, on the same grounds of breach of fiduciary duty, tortious interference and related claims, to recover the funds or property for your parent and ultimately for the estate and its beneficiaries.
The most common downside is that your parent may resent you for bringing a proceeding that compromises their independence. Guardianship cases are also complex and slow, and most people need a New York guardianship attorney to handle them.
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Is abusing a power of attorney criminal? Can your sister go to jail for it?
The conduct described above typically amounts to one or more of embezzlement, theft, identity theft, fraud and forgery, all of which are crimes. In practice, though, jail time is unlikely. Your parent is usually unwilling to press charges against a child, and the police tend to treat power of attorney abuse as a civil matter.
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Can I report the abuse to adult protective services?
Reporting financial abuse of a power of attorney to adult protective services usually produces little, because the agency views it as a civil matter. Your best opportunity to resolve the situation is to retain an attorney with experience in these cases. If other kinds of abuse are also present, such as neglect or physical abuse, you should report those to adult protective services.
How Can I Prove That My Sister Is Abusing a Power of Attorney?
The proof is in your parent’s financial statements and property records. If your sister is abusing the power of attorney, the statements will show transfers of money or property to your sister, or unexplained cash withdrawals, and the county records will show any deed out of your parent’s name. Ask your parent to show you those documents or to give you access to the accounts. If that is not possible, your attorney knows how to obtain them.
Why a Power of Attorney Is So Easy to Abuse
If your parent gave your sister a power of attorney, it makes sense to look closely at the arrangement and perhaps ask for some financial records just to be on the safe side. The document gives your sister authority to make legal and financial decisions for your parent covering bank accounts (including withdrawals and transfers), the purchase and sale of real estate, management of assets, stock and bond transactions, retirement plans, investments, and buying and selling other property.
That is nearly everything your parent owns, readily accessible and, in most families, unsupervised. Where large sums of money and substantial assets are involved, the temptation can be hard for an agent to resist.
How Long a Power of Attorney Stays in Effect
A power of attorney remains in effect until the person who made it dies, until it expires if it carries an expiration date, until your parent revokes it by giving your sister written notice, or until it is successfully contested and revoked by the court.
How Much Does It Cost to Hire a Lawyer for This?
Attorneys generally charge by the hour. In our firm, we charge $600 per hour and require a retainer deposit of $4,000 to start work on a case. No one likes to spend money on lawyers, but if the alternative is your parent continuing to suffer power of attorney abuse while the future inheritance keeps shrinking, the choice is usually an easy one.
Whether you are the sibling who suspects abuse or the agent who has been accused of it, we at the Law Offices of Albert Goodwin can help. Call us at 212-233-1233 or email [email protected].
