Can a Power of Attorney Withdraw Money After Death in New York?

The power of attorney no longer has the authority to withdraw money after an individual's death because the power of attorney is only valid during the individual's lifetime. Upon the person's passing, the executor of the deceased person's estate who has been appointed by the court takes over the responsibility of managing the assets. Any unauthorized withdrawals or transactions made by the power of attorney after the individual's death could lead to legal repercussions.

What are the Repercussions for Withdrawing Money Using a Power of Attorney After Death?

Withdrawing money from a deceased person's account using a power of attorney after their death can lead to serious legal consequences. This action is considered unauthorized and may be viewed as theft or fraud. The power of attorney document becomes invalid upon the individual's death, and the appointed person no longer has the legal right to access or manage the deceased's financial accounts.

If a power of attorney is found to have withdrawn money from the deceased's account after their passing, they may face criminal charges. Depending on the amount of money withdrawn and the circumstances surrounding the case, charges could range from misdemeanor theft to felony grand theft. In addition to criminal penalties, the power of attorney may also be held civilly liable for any damages caused by their actions.

In most cases, the power of attorney may be required to return the withdrawn funds to the deceased's estate (unless it was used for the deceased person's expenses such as payment of the medical bills of his last illness or funeral). This restitution is necessary to ensure that the assets are distributed according to the deceased's will or state intestacy laws. Failure to return the money could result in further legal action and penalties.

Furthermore, the power of attorney's actions may be considered a breach of their fiduciary duty. A fiduciary duty is a legal obligation to act in the best interest of the person who granted the power of attorney. By withdrawing money after the individual's death, the power of attorney has violated this trust and may face additional consequences, such as being held personally liable for any losses incurred by the estate.

It is crucial for individuals acting as power of attorney to understand the limits of their authority and to refrain from making any transactions or withdrawals after the grantor's death. Consulting with a legal professional can help clarify any questions about the proper course of action and ensure that the power of attorney acts within the boundaries of the law.

Should you need assistance or representation for or against an agent who has withdrawn money from the bank account after the principal's death, the Law Offices of Albert Goodwin are here for you. You can call us at 212-233-1233 or send us an email at [email protected]. We are located in Midtown Manhattan, New York.

The Statutory Foundation

New York's General Obligations Law § 5-1511 lists events that revoke a power of attorney, and the principal's death is at the top of the list. Once the principal dies, the agent has no further legal authority under the power, regardless of what the document says, regardless of whether the bank knows about the death, and regardless of whether the withdrawal would have been authorized during the principal's lifetime.

This rule applies whether the power was durable, springing, limited, or general. All types of powers of attorney terminate at death. There are no exceptions for emergency situations, funeral expenses, or family financial pressure.

Common Scenarios Where This Comes Up

The post-death withdrawal problem comes up in several recurring patterns:

The well-meaning agent. The agent is a child or close family member of the deceased. They know about the death but believe they can continue to use the power of attorney to handle bills, funeral expenses, or other estate matters. They write checks on the deceased's account, transfer funds to themselves to cover expenses, or otherwise transact. They are surprised to learn later that these actions were unauthorized.

The "we'll just keep using it" agent. The agent intentionally continues to use the power, perhaps believing that probate will be too slow, that the family agrees on what should happen, or that no one will notice. The transactions can range from small (paying a utility bill) to substantial (clearing out accounts).

The bank that did not know. The deceased's bank has not been notified of the death and is still processing the agent's transactions. The bank may eventually learn through other channels (a credit report, a Social Security notification, an executor's inquiry) and then the transactions become a problem.

The self-dealing agent. An agent who was already engaged in improper conduct during the principal's lifetime continues that conduct after death, hoping no one will notice. These cases often involve substantial sums and can be criminal.

What the Family Should Do When This Has Happened

If you discover that an agent has withdrawn funds after the principal's death, the appropriate steps are:

1. Document what has happened. Gather bank statements showing the post-death transactions. Note the date of death and the dates of the transactions.
2. Notify the bank. Provide a copy of the death certificate to the bank and ask the bank to freeze the account pending appointment of a fiduciary. The bank may have its own forms to use for this purpose.
3. Initiate the estate. If letters have not been issued, the family should petition the Surrogate's Court to appoint an executor or administrator.
4. Demand return. The executor or administrator can demand that the agent return the withdrawn funds to the estate. Some agents return funds willingly when the issue is explained.
5. Consider legal action. If the agent will not return the funds, the executor can sue for recovery in Surrogate's Court (through a discovery proceeding under SCPA § 2103) or Supreme Court.
6. Consider criminal referral. Where the conduct appears intentional and the amounts are substantial, referring the matter to the District Attorney's Office is appropriate.

What the Agent Should Do When Realizing the Mistake

If you are an agent who has made post-death withdrawals and now realize they were unauthorized, the appropriate response is honest disclosure and prompt remediation:

• Stop further transactions immediately.
• Identify all transactions made after the death.
• Document the purpose of each transaction. Funds used for legitimate estate expenses (funeral, medical bills of last illness) may be defensible.
• Return any funds that were used for personal purposes.
• Disclose the situation to the eventual executor or administrator.
• Consult an attorney about your potential exposure.

Honest mistakes can usually be addressed. Cover-ups make everything much worse and turn a recoverable error into significant criminal exposure.

Legitimate Post-Death Expenses

While the agent's authority terminates at death, certain expenses are clearly legitimate obligations of the estate that the agent might have paid in good faith:

• Funeral and burial expenses.
• Medical bills from the deceased's last illness.
• Outstanding utility bills, mortgage payments, and similar pre-death obligations.
• Necessary maintenance and insurance on the deceased's residence to prevent damage or loss.

An agent who paid these expenses can typically present documentation to the executor and recover the amounts as legitimate expenses of administration. The agent's payment is treated as an advance to the estate, recoverable upon proper proof. This is different from the agent using funds for personal purposes, which remains unauthorized.

Why Family Members Sometimes Cooperate with Post-Death Withdrawals

Sometimes the entire family agrees that the agent should continue using the power of attorney after the principal's death, particularly for small expenses. The reasoning is practical — opening probate is slow and expensive, and minor bills need to be paid. But this approach has risks:

• The bank may eventually catch the situation and reverse the transactions or close the account.
• Tax authorities may treat the transactions as unauthorized.
• Other family members or creditors may later challenge the transactions.
• The agent personally bears the risk of recharacterization.

The better path is generally to obtain preliminary letters or to wait for the regular letters to issue. The delay is usually short, the legal authority is clear, and the agent (now executor) is protected.