If you suspect that someone is financially abusing your loved one through a power of attorney, your first instinct is to find out how to challenge the power of attorney, so that the damage is stopped and the property is returned. This page explains what power of attorney abuse looks like, what you can and cannot do about it on your own, and what usually works.
If You Suspect Power of Attorney Abuse
Abuse of a power of attorney can be financially and emotionally devastating to a person’s estate and to their heirs and beneficiaries. It happens most often in connection with elder care, or the care of a person who is physically disabled or mentally incapacitated. If you are alleging power of attorney abuse, your goals are to challenge the power of attorney, have the agent return the money and property, have the court revoke, set aside or cancel the power of attorney, if possible have the agent punished in a criminal proceeding, and find other ways of protecting your loved one.
If your loved one is suffering this kind of abuse, it threatens their financial well-being now and diminishes your future inheritance. Most people who take on a power of attorney challenge need a lawyer with experience in power of attorney abuse litigation, settlement and mediation.
What Counts as Power of Attorney Abuse
A power of attorney gives the agent authority to make legal and financial decisions for someone else: bank accounts, including withdrawals and transfers; buying and selling real estate; managing assets; stock and bond transactions; retirement plans; and investments. Where large sums of money and substantial assets are involved and readily accessible, that authority creates a temptation that some people cannot resist, and an opening for fraud, self-interest and embezzlement.
There are many ways an agent can abuse a power of attorney. The examples we see most often are opening joint bank accounts and naming the agent as beneficiary; buying life insurance policies naming the agent as beneficiary, or changing the beneficiaries on existing policies; buying real estate with the principal’s money and transferring title for the agent’s benefit; unauthorized gifts to the agent, or to other individuals and charities; outright theft of property; self-dealing; unauthorized use of credit cards; and establishing credit in the principal’s name.
Conduct of this kind can leave a person’s estate, and their heirs, with no assets and no inheritance. It typically involves one or more of the crimes of embezzlement, theft, identity theft, fraud and forgery.
What Can I Do If I Suspect Power of Attorney Abuse?
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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 they may be being defrauded, and ask them to revoke the power of attorney in writing, ideally with a copy to you. You may then want to follow up to make sure the person suspected of abusing the power of attorney no longer has authority over any of your loved one’s assets.
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Ask the agent to return the money or property
This may or may not work, but you can always ask. It may be that the agent’s plan was to abuse the power of attorney only if they could get away with it. Once discovered, some agents decide to cut their losses rather than face a civil lawsuit or criminal prosecution, and simply return the money or property.
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Bring a lawsuit to challenge the power of attorney
The principal, or their potential heirs, can contest the power of attorney in court by suing the agent directly for breach of fiduciary duty, tortious interference or other causes of action, to get the embezzled funds or property returned to the principal and, ultimately, to the estate and beneficiaries. These cases are complex and time-consuming, and most people need an experienced New York litigation attorney to see them through.
The difficulty is that although your loved one can revoke the power of attorney and can sue the agent to get the money back, they are often too old and frail, and lack the will power or sometimes even the mental capacity, to bring a lawsuit. They also often feel bad for the person who took the money and do not want them to get into trouble with the law.
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The best way to challenge a power of attorney is often a guardianship
You cannot simply sue the agent in your loved one’s name. New York law does, however, give the principal’s spouse, child or parent, and certain others with an interest in the principal’s welfare, standing to bring a special proceeding to compel the agent to account, to remove the agent, or to have the power of attorney construed (General Obligations Law § 5-1510). And your loved one is unlikely to sue, because the process is hard and the person abusing the power of attorney is someone they care about. The way around this is to obtain a guardianship over your loved one. Once you are the guardian, you can bring the lawsuit against the agent for breach of fiduciary duty, tortious interference or other causes of action, and have the embezzled funds or property returned to your loved one and ultimately to the estate and its beneficiaries.
A guardianship proceeding has downsides. The most common is that your loved one may resent you for bringing a proceeding that compromises their independence. These matters are complex and time-consuming, and most people need an experienced litigation attorney to handle them.
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Is abusing a power of attorney a crime? Can the police get involved?
Power of attorney abuse can involve state and federal crimes of embezzlement, theft, identity theft, fraud and forgery. In practice, though, the agent is unlikely to face jail time, because the victim is unlikely to press charges and the police tend to treat power of attorney abuse as a civil matter. The realistic route is civil court; a criminal proceeding is not usually the way to go.
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Can I report the abuse to adult protective services?
Reporting to adult protective services is not a way to challenge a power of attorney and is unlikely to produce a result, because those agencies also typically view this as a civil matter. Your best opportunity to resolve the situation is to retain an attorney experienced in these cases. If other types of abuse are present, however, you do want to report them to adult protective services.
How Can I Prove Power of Attorney Abuse?
To challenge a power of attorney, you need to prove the abuse. The proof is in the financial statements and property records of the person who made the power of attorney. If abuse took place, you will see transfers of money or property to the agent, or unexplained cash withdrawals. You can 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.
Even without a specific suspicion, if your loved one has given someone a power of attorney it is worth looking closely at the arrangement and asking for some financial records, just to be safe. The potential for abuse is real.
How Long a Power of Attorney Stays in Effect
A power of attorney remains in effect until one of four things happens: the person who made it dies; it expires, if it has an expiration date; the principal revokes it by giving written notice to the agent; or it is successfully challenged and revoked by the court.
What It Costs to Hire a Lawyer to Challenge a Power of Attorney
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 to spend money on lawyers, but if the alternative is that your relative keeps suffering power of attorney abuse and your future inheritance keeps shrinking, or that an accusation of abuse goes undefended, it is usually an easy choice.
Talk to Us About Challenging a Power of Attorney
The Law Offices of Albert Goodwin has handled power of attorney abuse cases since 2008, on both sides: for families trying to stop an abusive agent, and for agents who have been wrongly accused. Our office is at 31 W 34 Str, Suite 7058, New York, NY 10001. Call us at 212-233-1233 or email [email protected].
