When a Power of Attorney Agent Abuses Their Authority in New York

A New York power of attorney is one of the most powerful legal instruments a person can sign. It allows another person — the agent (sometimes called the attorney-in-fact) — to control the principal's bank accounts, sell real estate, manage investments, and move money. When the agent abuses that authority, the financial damage can be severe and the legal remedies are specific. This page explains how New York law governs financial powers of attorney and, in particular, how an interested person can compel a formal accounting and bring a special proceeding under General Obligations Law (GOL) §5-1510.

A note on terminology: A "patient advocate" or health care proxy is the person who makes medical decisions — that is governed by Public Health Law Article 29-C, not by the financial power of attorney statute. This page addresses the financial power of attorney agent. If you are dealing with a medical decision-maker, see our advance directive attorney page.

If you suspect a power of attorney agent is misusing a principal's assets in New York, the Law Offices of Albert Goodwin can help. Call 212-233-1233 or email [email protected].

The Legal Framework: GOL Article 5, Title 15

New York's statutory power of attorney is found in General Obligations Law Article 5, Title 15 (§§5-1501 through 5-1514). The statute was substantially reformed effective June 13, 2021. The 2021 amendments matter because they changed how a valid New York power of attorney looks and what an agent must do:

• The separate "Statutory Gifts Rider" was eliminated. Instead, authority for gifts and other major transactions is now built into the Modifications section of the form itself.
• The form must be signed by the principal (or by someone at the principal's direction), acknowledged before a notary, and witnessed by two witnesses who are not named in the document.
• The law now requires "substantial compliance" rather than exact wording, and it imposes penalties on third parties (such as banks) that unreasonably refuse to honor a valid power of attorney.

A power of attorney signed under the prior law (before June 13, 2021) remains valid if it complied with the rules in effect when it was executed. The version of the statute that applies often determines what gifting and self-dealing the agent was permitted to do.

What Duties Does the Agent Actually Owe? (GOL §5-1505)

The agent is a fiduciary. Under GOL §5-1505, an agent who accepts authority under a power of attorney must:

• Act according to any instructions from the principal, or, where there are no instructions, in the principal's best interest;
• Avoid conflicts of interest that would impair the agent's ability to act in the principal's best interest;
• Keep the principal's property separate and distinct from the agent's own property (no commingling);
• Keep a record of all receipts, disbursements, and transactions; and
• Make those records available within fifteen days of a written request by a person entitled to request them.

This recordkeeping duty is the legal foundation for forcing an agent to account. An agent who took money cannot simply refuse to explain where it went — the law requires them to maintain and produce records.

The Critical Distinction: Gifts and Self-Dealing

The single most common area of abuse is gifting. The default New York statutory power of attorney allows the agent to make gifts of up to $5,000 per year in the aggregate. Any larger gifts — and any transfer of the principal's property to the agent personally — require express authority granted in the Modifications section of the form (under prior law, in the Statutory Gifts Rider).

This means that if an agent:

• Wrote themselves checks beyond the $5,000 annual gift limit,
• Re-titled the principal's bank accounts into joint accounts with rights of survivorship for the agent's benefit,
• Transferred the principal's real estate to themselves or a family member,
• Changed beneficiary designations on life insurance or retirement accounts to favor the agent, or
• Used the principal's funds for the agent's own bills and expenses,

— and the power of attorney did not grant express modified gifting authority, those transactions are presumptively improper and recoverable. Where an agent benefits personally from a transaction, New York courts apply heightened scrutiny and may require the agent to prove the transaction was authorized and fair.

The Core Remedy: A Special Proceeding Under GOL §5-1510

GOL §5-1510 is the statute most New York practitioners rely on when an agent has gone wrong. It allows a special proceeding to be commenced in Supreme Court to obtain relief. Crucially, the statute lists a wide range of people who have standing to bring the proceeding, including:

• The principal or the agent;
• A spouse, child, or parent of the principal;
• A presumptive heir or beneficiary of the principal;
• A government agency with authority to protect the welfare of the principal (such as Adult Protective Services);
• A person named as a successor agent or monitor; and
• Certain other interested persons identified in the statute.

This is what makes §5-1510 so useful to family members: you do not have to be the principal to ask the court to act. The court may, among other things:

• Compel the agent to account — to produce a full record of every transaction made under the power of attorney;
• Determine whether the power of attorney is valid;
• Construe the meaning of the document;
• Order the agent to render damages or reimburse the principal for losses caused by a breach of fiduciary duty; and
• Remove the agent or revoke the power of attorney where appropriate.

How the §5-1510 Proceeding Works, Step by Step

1. Written demand first. Because §5-1505 requires the agent to produce records within fifteen days of a written request, a careful first step is a written demand for an accounting. The failure to respond strengthens the later court petition.
2. Petition and order to show cause. The proceeding is typically commenced by petition, often by order to show cause, in the Supreme Court of the county where the principal resides. The petition sets out the petitioner's standing, the relationship to the principal, the powers granted, and the facts suggesting abuse.
3. Compelling the accounting. If the court orders an accounting, the agent must produce a formal schedule of receipts, disbursements, and the assets remaining. Unexplained withdrawals and self-transfers become the focus.
4. Discovery and bank subpoenas. The petitioner can subpoena bank records, brokerage statements, deeds, and closing files to trace where the money went. Bank records frequently reveal cash withdrawals, transfers to the agent's own accounts, or checks written to the agent that exceeded the gifting limit.
5. Surcharge. If the accounting and discovery establish improper transactions, the court can surcharge the agent — that is, order the agent to repay the principal (or, after death, the estate) for the losses, plus, in appropriate cases, interest.

What If the Principal Has Already Died?

When the principal has died, the focus often shifts to Surrogate's Court. The estate's fiduciary (the executor or administrator) can bring a discovery and turnover proceeding under SCPA §2103 to recover property the agent improperly took, and the court can compel the agent to turn over assets or pay the estate's loss. We address that procedure on our discovery and turnover proceeding page. Where the agent's conduct amounts to a breach of fiduciary obligation, the claims overlap with our breach of fiduciary duty practice.

When Guardianship Under Mental Hygiene Law Article 81 May Be Necessary

If the principal is alive but lacks the capacity to revoke the power of attorney or protect themselves, a guardianship under Mental Hygiene Law (MHL) Article 81 may be appropriate. Under Article 81, a court may appoint a guardian if it finds, by clear and convincing evidence, that the person is likely to suffer harm because they cannot manage their own affairs and do not adequately understand the consequences of that inability.

An Article 81 guardian can be granted authority to revoke an abusive power of attorney and to pursue recovery of the principal's assets on the principal's behalf. The trade-off is that guardianship is intrusive — it can restrict the principal's independence — so courts look for the least restrictive intervention. Where a §5-1510 proceeding can fix the problem without stripping the principal of broader rights, that narrower remedy is often preferred. We discuss removal of fiduciaries generally on our fiduciary removal page.

Gathering the Evidence

Proving misuse of a power of attorney is fundamentally a financial exercise. The strongest evidence typically includes:

• The power of attorney itself, to determine exactly what authority — and what gifting authority — was granted;
• Bank and brokerage statements showing transfers, withdrawals, and changes in account titling;
• Deeds and title records reflecting real estate transfers;
• Beneficiary-designation changes on insurance and retirement accounts; and
• The agent's own records, which §5-1505 requires them to maintain.

Where a family member does not have access to these documents, the §5-1510 accounting and the accompanying subpoena power are usually how they are obtained.

Is Misuse of a Power of Attorney a Crime?

Depending on the facts, an agent's conduct can give rise to criminal exposure in New York — for example, larceny (Penal Law Article 155), forgery, or identity theft. Whether prosecutors pursue charges depends on the evidence, the dollar amounts, the victim's capacity, and the willingness of the District Attorney's office to take the case. It is not accurate to say that police or prosecutors automatically treat every power of attorney dispute as "just a civil matter" — some cases are prosecuted, and some are not. The civil remedies under §5-1510 and SCPA §2103 generally proceed independently of any criminal investigation, and they are usually the more reliable path to actually recovering money.

Reporting to Adult Protective Services

New York's Adult Protective Services (APS) program, operated under Social Services Law Article 9-B, exists to protect adults who, because of physical or mental impairment, are unable to protect themselves from abuse, neglect, or financial exploitation. Financial exploitation of an impaired adult is within APS's mandate. APS can investigate, can assist in arranging protective services, and in appropriate cases may itself petition for guardianship. Reporting to APS is a legitimate and sometimes important step — particularly where the principal is vulnerable and isolated — and it does not prevent you from pursuing the civil remedies described above. Banks and certain professionals also have heightened obligations to watch for and report suspected exploitation of older adults.

An Illustrative Scenario

Consider an anonymized, composite example of the kind of matter this practice addresses: an elderly parent signs a New York statutory power of attorney naming one adult child as agent. The form grants no modified gifting authority. Over two years, the agent transfers funds from the parent's accounts into a new joint account and uses the money to pay the agent's own mortgage. Another sibling, who has standing under §5-1510 as the principal's child, demands records in writing under §5-1505; the agent refuses. The sibling petitions Supreme Court to compel an accounting, subpoenas the bank records, and establishes that the transfers far exceeded the $5,000 annual gift default. Because the document granted no broader authority, the court can surcharge the agent for the improper transfers. This illustration is provided to explain the procedure only and is not a guarantee of any particular result; outcomes depend entirely on the specific facts and documents.

How This Page Differs From Our Related Pages

This page focuses specifically on the statutory mechanics of a financial power of attorney agent's duties and the §5-1510 accounting remedy. For related but distinct issues, see our pages on breach of fiduciary duty, discovery and turnover proceedings, fiduciary removal, and health care proxies and advance directives.

Working With Our Firm

These matters are fact-intensive and document-driven. An experienced attorney can issue the §5-1505 written demand, draft and file the §5-1510 petition, subpoena the financial records, and seek a surcharge or, where necessary, a guardianship. Attorney's fees in litigation of this kind are generally billed hourly, and the specific terms are set out in a written retainer agreement. Whether the goal is recovering misused funds or defending an agent who is wrongly accused, the analysis starts with the document and the bank records.

If you are dealing with a power of attorney agent who may be misusing a principal's assets in New York — or if you are an agent who has been accused — contact the Law Offices of Albert Goodwin at 212-233-1233 or [email protected].

This article was written by Albert Goodwin, Esq., a New York estate and trust litigation attorney. This page is for general informational purposes only, reflects New York law, and is not legal advice for any specific situation. Statutes and procedures change; consult a qualified New York attorney about your particular circumstances.