When your sibling abuses a power of attorney, that can mean serious financial consequences for your parent’s well being and diminishes your future inheritance. A power of attorney gives your sibling the authority to make legal and financial decisions for your parents regarding such matters as bank accounts, the purchase and sale of real estate and the management, stock and bond transactions, retirement plans, investments and disposition of other assets. The power attorney doesn’t work for things such as voting, revoking or amending a will, divorce or marriage matters or fulfilling personal services under a contract matter.
By creating a power of attorney and giving your sibling such important powers, your parent exposed themselves to a potential for fraud, self-interest and embezzlement by your sibling. A situation where large sums of money and substantial assets are involved and readily accessible can create a temptation for your sibling. Children sometimes abuse their parents’ powers of attorney, when the elderly parent needs elder care and are physically disabled or mentally incapacitated. A financially abusive sibling could leave a your parent’s estate and their heirs without any assets or inheritance.
A power of attorney is in effect until your parent dies unless there is an expiration limit. Or, your parent can revoke the power of attorney at any time by giving written notice to your sibling (hopefully with a copy of the notice to you). Abuses of powers of attorney by a sibling can be financially and emotionally devastating to the parents, who may feel surprised and betrayed by this misconduct.
Since there is such a huge potential for disagreements and fraudulent acts to arise, creating a power of attorney can lead to potential future lawsuits if parents choose the wrong sibling as the power of attorney. A parent should carefully consider which one of their children (if any) should act as their power of attorney. If a parent does decide to name a child as a power of attorney, they should pick the child who possess traits of trust, honor and integrity.
How can my sibling abuse a power of attorney
• Opening joint banks accounts and naming the sibling as a beneficiary or co-owner with right of survivorship
• Purchasing life insurance policies with your parent as insured and naming the sibling as a beneficiary or changing existing life insurance account beneficiaries
• Purchasing real estate with your parent’s money and transferring title of real estate for the benefit of the sibling
• Unauthorized gifting to the sibling
• Outright theft by sibling of the parent’s property
• Unauthorized use by cousin of credit cards or establishing credit under the parent’s name
Can my sibling go to jail for abusing a power of attorney?
Serious abuses generally involve state and/or federal crimes of embezzlement, theft, identity theft, fraud or forgery, but it is unlikely that your sibling will face jail time, as your parent is unlikely to press charges against their child. However, your sibling can face fines as well as civil litigation and restitution of funds and property to your parent’s estate and to you as a beneficiary.
What can I do if my sibling is abusing a power of attorney?
Although your parent can revoke the power of attorney that your sibling is abusing and can sue your sibling to get the money back, they are often too old and frail and don’t have the will power or sometimes even the mental capacity to bring a lawsuit. They also feel bad for the sibling who took the money from them, thinking that they don’t want that child to get into any kind of trouble with the law. One option may be to obtain guardianship over your parent. Once a guardian, you can bring a lawsuit against your sibling abusing the power of attorney on grounds that a fiduciary duty was broken, tortuous interference or other causes of action to get the embezzled funds or property returned to the parent, and ultimately to benefit the estate and beneficiaries. There are some downsides to the guardianship proceeding, the most common downside being that your parent can resent you for bringing a proceeding which compromises their independence. These matters are complex, time-consuming and most people require the assistance of an experienced New York probate estate litigation attorney to help resolve matters for them in court.
If you wish to speak to a New York estate attorney, call the Law Offices of Albert Goodwin at (212) 233-1233 or (718) 509-9774..