When you suspect that an agent under a power of attorney has been misusing the principal’s money, the question is rarely just whether something went wrong. It is how to prove it. This page explains how a power of attorney abuse investigation actually works in New York: how to obtain the financial records, how to force an accounting, how forensic accounting reconstructs missing funds, and what court tools exist to recover misappropriated assets. If you are looking for the legal remedies once abuse has already been confirmed, see our pages on breach of fiduciary duty and the discovery and turnover proceeding. This page is about the investigation itself.
What a New York Power of Attorney Can and Cannot Authorize
In New York, durable powers of attorney are governed by General Obligations Law Article 5, Title 15 (§ 5-1501 and following), including the statutory short form power of attorney. Effective June 13, 2021, New York substantially reformed its power of attorney statute, and three features of the current law shape every investigation.
First, the agent is a fiduciary. Under GOB § 5-1505 the agent must act according to the principal’s reasonable expectations and in the principal’s best interest, avoid conflicts of interest, and keep the principal’s property separate from the agent’s own. Second, record-keeping is mandatory: the agent must keep a record of all receipts, disbursements and transactions and must make those records available on reasonable request. Third, gifting is limited. Under the 2021 reform the statutory form itself permits certain gifts, but gifts and other major self-benefiting transactions beyond the statutory authority must be expressly granted in the document. The former separate Statutory Gifts Rider was eliminated and folded into the modifications section of the form. Unauthorized gifting, especially gifts the agent makes to themselves, is one of the most common forms of abuse.
A power of attorney does not authorize the agent to make a will, vote in elections, make health-care decisions (that requires a health care proxy) or change the principal’s designated beneficiaries beyond what the document allows. An agent acting outside the granted authority is a frequent red flag.
Warning Signs That Warrant an Investigation
An agent can be a child, spouse, sibling, friend or professional. Whoever the agent is, certain transactions are inherently suspicious and deserve a closer look.
| Warning sign | Why it matters |
|---|---|
| Sole accounts converted into joint accounts naming the agent as co-owner with right of survivorship | The money passes to the agent at death, outside the will and outside the estate. |
| Beneficiary changes on life insurance, retirement or payable-on-death accounts in favor of the agent | A beneficiary change is a transfer of the principal’s estate plan, not a management decision. |
| Real estate bought or transferred with the principal’s funds for the agent’s benefit | The deed and closing records leave a paper trail the agent must explain. |
| Gifts to the agent or to people the agent chooses | Gifting beyond what the document expressly allows is outside the agent’s authority. |
| Cash withdrawals, ATM activity or transfers with no apparent benefit to the principal | The agent must be able to show what each disbursement did for the principal. |
| Use of the principal’s credit cards, or new credit opened in the principal’s name | Debt run up for the agent’s benefit is a loss to the principal. |
| Outright disappearance of the principal’s property | Missing property has to be accounted for, and cannot be. |
| Refusal to provide records or an accounting when asked | The statute requires records to be produced on reasonable request. |
How a Power of Attorney Investigation Actually Works
A serious investigation is a structured, evidence-driven process. The path differs depending on whether the principal is still living or has died, but the building blocks are the same.
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Demand the record and an accounting
The first step is usually a written demand for records. Under GOB § 5-1505(3) an agent must keep records and make them available. New York also allows certain interested parties, including a monitor named in the instrument, a guardian, or, in specified circumstances, a person who would be a distributee, to compel the agent to account, and GOB § 5-1510 lets the court compel the agent to produce a record of all transactions and to account. A formal demand forces an agent either to produce documentation or to expose the absence of it.
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Gather the financial records
The core of any investigation is the paper trail. We assemble bank statements, cancelled checks, wire and ACH records, credit card statements, brokerage statements, deeds, mortgage records and beneficiary-change forms. Where records are withheld, they can be obtained through court-authorized subpoenas to banks and financial institutions once a proceeding is commenced. Banks generally will not turn over a customer’s records voluntarily without a subpoena or proper authority.
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Forensic accounting
Once the records are in hand, a forensic accountant, or an experienced attorney working with one, reconstructs the cash flow: matching deposits to disbursements, identifying transfers to the agent, tracing funds into the agent’s own accounts or assets, and quantifying the loss. The same work identifies gifts, self-dealing and transactions that had no legitimate purpose for the principal.
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Court compulsion when the agent will not cooperate
If the principal is alive, a special proceeding under GOB § 5-1510 can compel the agent to account and can ask the court to construe the instrument and order relief. Where the principal is incapacitated, an Article 81 guardianship under the Mental Hygiene Law may be appropriate; a court-appointed guardian or court evaluator has authority to investigate the principal’s finances and pursue recovery on the principal’s behalf. See our page on removing a fiduciary for related procedures.
If the principal has died, the estate’s fiduciary can bring a discovery proceeding under SCPA 2103 to compel an examination of anyone believed to be withholding or concealing the decedent’s property, and a turnover proceeding under SCPA 2104 to compel the return of that property to the estate. These Surrogate’s Court proceedings allow examination under oath and document production. Our discovery and turnover proceeding page covers them in detail.
Legal Remedies After Abuse Is Confirmed
When the investigation establishes misuse of the power of attorney, several causes of action and remedies may be available, and they are often pursued together.
| Remedy | What it does |
|---|---|
| Breach of fiduciary duty | The agent’s statutory duties under GOB § 5-1505 give rise to a claim for breach, with the remedy of returning the misappropriated funds and assets. See breach of fiduciary duty. |
| Conversion and constructive trust | Where the agent took specific property or used the principal’s money to acquire assets, the court can impose a constructive trust and order turnover. |
| Tortious interference | In some cases involving improper interference with the principal’s assets or expected inheritances, a tortious interference claim may be available. |
| Compelled accounting and surcharge | The court can require the agent to account and surcharge the agent, that is, charge the agent personally, for losses caused by improper transactions. |
| Revocation | A competent principal may revoke the power of attorney at any time by signed, dated written notice delivered to the agent and to any third parties relying on it. |
Can the Agent Face Criminal Charges?
Serious abuse can constitute state or federal crimes, including larceny (Penal Law Article 155), forgery, identity theft and fraud. A vulnerable principal often does not want to press charges, particularly when the agent is a family member, but criminal liability does not depend solely on the principal’s wishes. Adult Protective Services, the police and a District Attorney can investigate and prosecute financial exploitation of a vulnerable adult whether or not the principal personally files a complaint, and New York treats financial exploitation of the elderly seriously. Still, most families pursue the civil route, an accounting and recovery of the funds, because the practical goal is usually to get the money back into the principal’s hands or into the estate.
If the Principal Is Too Frail or Unwilling to Act
A common obstacle is that the principal, often an elderly parent, is too frail, lacks capacity or feels protective of the agent and refuses to sue. In that situation an interested person may petition for an Article 81 guardianship. A guardian appointed by the court can investigate the finances, demand an accounting from the agent and bring suit to recover misappropriated property on the principal’s behalf. The downside is that the proceeding can strain family relationships and the principal may resent the loss of independence, so this step requires careful judgment.
How to Reduce the Risk of Abuse
Prevention matters. When creating a power of attorney, a principal should choose an agent with a demonstrated record of honesty and should consider naming a monitor under the 2021 statutory form, a person entitled to request and receive records and an accounting from the agent. Limiting gifting authority, requiring periodic accountings and keeping the original document under control are all sensible safeguards.
Frequently Asked Questions
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How do I get an agent’s bank records?
Banks generally require a subpoena or proper legal authority before releasing a customer’s records. Once a proceeding is commenced, for example a compelled accounting under GOB § 5-1510 or an SCPA 2103 discovery proceeding, subpoenas can be issued to the financial institutions.
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Can I force the agent to account?
Yes. Under GOB § 5-1510 certain interested parties can ask the court to compel the agent to produce a record of all transactions and to account. If the principal has died, the estate’s fiduciary can compel turnover under SCPA 2104.
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Does the principal have to be alive?
No. While the principal is alive, relief is sought through GOB § 5-1510 or an Article 81 guardianship. After death, the abuse is pursued through SCPA 2103 and 2104 proceedings in Surrogate’s Court.
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What if I am the agent being accused?
An agent who acted within their authority and kept proper records is in a strong position to defend an accounting. We also represent agents who are being unfairly accused and help them produce a clear, documented record of their transactions.
Speak With Us
Investigating and litigating power of attorney abuse is document-intensive work. If you believe an agent has misused a power of attorney, or you are an agent who has been unjustly accused, Albert Goodwin and the Law Offices of Albert Goodwin can help. Call 212-233-1233 or email [email protected].
