A New York power of attorney is one of the most powerful documents a person can sign. It lets another person, the agent (sometimes called the attorney-in-fact), control the principal’s bank accounts, sell real estate, manage investments and move money. When the agent abuses that authority the damage can be severe, and the remedies are specific. This page explains how New York law governs financial powers of attorney and 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, governed by Public Health Law Article 29-C rather than the financial power of attorney statute. This page is about the financial agent. If your concern is a medical decision-maker, see our advance directive page.
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, and the amendments changed both how a valid New York power of attorney looks and what an agent must do. The separate Statutory Gifts Rider was eliminated; 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 penalizes third parties such as banks that unreasonably refuse to honor a valid power of attorney.
A power of attorney signed before June 13, 2021 remains valid if it complied with the rules in effect when it was executed. Which version of the statute applies often determines what gifting and self-dealing the agent was permitted to do.
The Agent’s Duties Under 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 the principal’s instructions or, where there are none, in the principal’s best interest; must avoid conflicts of interest that would impair that; must keep the principal’s property separate from the agent’s own, with no commingling; must keep a record of all receipts, disbursements and transactions; and must make those records available within fifteen days of a written request by a person entitled to ask.
That recordkeeping duty is the 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.
Gifts and Self-Dealing
The 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 gift, and any transfer of the principal’s property to the agent personally, requires express authority granted in the Modifications section of the form (under prior law, in the Statutory Gifts Rider).
So if an agent wrote themselves checks beyond the $5,000 annual limit, retitled the principal’s bank accounts into joint accounts with survivorship rights 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 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 in Supreme Court, and it gives standing to a wide range of people: 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 principal’s welfare, such as Adult Protective Services; a person named as successor agent or monitor; and certain other interested persons identified in the statute. That 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 compel the agent to account for 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 pay 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.
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Written demand
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. A failure to respond strengthens the later petition.
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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.
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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.
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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 to the agent that exceeded the gifting limit.
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Surcharge
If the accounting and discovery establish improper transactions, the court can surcharge the agent, ordering them to repay the principal (or, after death, the estate) for the losses, plus interest in appropriate cases.
An Example
Consider a composite example. 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 shows that the transfers far exceeded the $5,000 annual default. Because the document granted no broader authority, the court can surcharge the agent for the improper transfers. Outcomes always turn on the specific documents and facts, but this is the shape most of these cases take.
If the Principal Has Already Died
When the principal has died, the focus usually 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 describe 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 an Article 81 Guardianship 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. The 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 given authority to revoke an abusive power of attorney and to pursue recovery of the principal’s assets.
The trade-off is that guardianship is intrusive and 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 is the power of attorney itself, which shows 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 keep. 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 expose them to criminal charges 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 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 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, protects adults who, because of physical or mental impairment, cannot protect themselves from abuse, neglect or financial exploitation. Financial exploitation of an impaired adult is within its mandate. APS can investigate, can help arrange 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.
Working With Our Firm
These matters are fact-intensive and document-driven. We 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. Fees in litigation of this kind are generally billed hourly under 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 an agent who may be misusing a principal’s assets, or you are an agent who has been accused, call us at 212-233-1233 or email [email protected].
