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A New York Power of Attorney May Not Be Used Improperly To Transfer Bank Accounts

Estate Attorneys in New York are familiar with the use of a Durable Power of Attorney to assist with various activities. Sometimes a power is signed by a principal to assist with a specific transaction such as the sale or purchase of real estate. The power may be needed because the principal is unavailable to attend a closing of title because he is out of town.

In many other situations, a principal may name an agent in the context of estate planning and provide the agent with very broad powers to act in a number of different areas including real estate transactions, business operating transactions and banking transactions.  New York General Obligations Law Section 5-1501 and subsequent statutory sections comprise “The Statutory Short Form and Other Powers of Attorney For Financial and Estate Planning”. As has been discussed in earlier posts in the New York Probate Lawyer Blog, the power of attorney law was recently revised in an attempt to eliminate the misuse of the agent’s authority and prevent financial abuse. There have been and continue to be many instances where an agent improperly uses the power to obtain economic or other advantages.When improper conduct occurs, there is often Estate Litigation in the Surrogate’s Court or Guardianship Litigation in the Supreme Court to attempt to rectify these problems.
The recent case of Estate of Julius Gargani decided by Nassau Surrogate Edward McCarty III on March 31, 2015 provides a typical example of wrongful conduct by an agent under a power of attorney.  In Gargani, the decedent had signed a number of powers. Utilizing the power prior to the decedent’s death, the agent had closed a number of Totten Trust bank accounts that the decedent had created . The funds were re-deposited into the decedent’s name alone. A Totten Trust account is basically one which is held in the name of the depositor which names a beneficiary that is to receive the account proceeds upon the depositor’s death. In Gargani, by using the power of attorney, the agent was able to close the accounts and eliminate the name of the beneficiary thereby causing the bank accounts to pass through the decedent’s estate to the agent’s mother. After review, the Court determined that the closing of accounts was improper since the power of attorney did not specifically authorize these transactions. The Court also found that the agent breached her fiduciary duty to the principal by closing out the accounts.

I have represented many clients in cases where there have been issues regarding the proper use of a power of attorney. If you have an issue in a Guardianship matter or Estate matter concerning the use of a power of attorney, call me to discuss the problem.

New York City probate lawyer, Jules Martin Haas has helped many clients over the past 30 years throughout Brooklyn and Bronx Counties resolve issues relating to estate litigation and settlement in New York Probate proceedings. If you or someone you know has any questions regarding these matters, please contact me at (212) 355-2575 for an initial consultation.

Jules Martin Haas provides his clients and members of the community with a free monthly e-newsletter which contains articles covering a variety of legal topics including estate planning, financial matters and real estate. If you wish to be placed on the e-newslist, simply e-mail me at jules.haas@verizon.net. You can cancel receiving the newsletter at anytime.

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