Did You Know that an Agent Under a Power of Attorney May Transfer Real Estate to Himself

rendered-300x107Part of the estate planning process involves the creation and execution of advance directives.  These documents include a Power of Attorney, Living Will, Health Care Proxy and Living Trust.  One of the primary goals of these papers is for the creator to provide specific instructions for property management and personal care in the event he is unable to handle such matters due to incapacity or other circumstances.  In Article 81 Guardianship proceedings, the Guardianship Court will look to see if there are any advance directives in place.  If so, the Court may dispense with the appointment of a Guardian.  However, even where advance directives exist, Mental Hygiene Law Section 81.29 authorizes the Court to revoke advance directives if it finds wrongdoing such as undue influence.  The New York Probate Lawyer Blog has published many articles regarding advance directives.

One advance directive, a Power of Attorney, allows a person to make various property management decisions as an agent for the person who creates the documents.  These property matters are listed in the power and include the authority to handle real estate transactions, banking transactions, insurance transactions and business operating transactions.  The creator may choose which areas to grant authority and can modify the manner in which the authority is to be exercised.  There can be one agent or multiple agents who can act separately or together depending upon the written instructions.

As can be expected, the use of a power of attorney is sometimes abused and agents may take advantage of their power for their own benefit.  Courts tend to be very cautious regarding these matters and there tends to be a great deal of litigation in the Surrogate’s Court and the Guardianship Court concerning the proper exercise a power of attorney.

A recent estate case entitled Estate of Maika, decided by the 4th Department Appellate Division on June 3, 2022, presented an interesting power of attorney dispute.  In Maika, a person created a power of attorney which designated five (5) of his children as agents.  The power provided authority for the children to act regarding various matters, including real estate transactions, if a majority of the agents agreed.  However, the power did not give the agents the power to make major gifts.  One child, Philip, along with two other siblings, transferred the creator’s home to Phillip and another child.  After the creator’s death, the estate administrator commenced a turnover proceeding in Surrogate’s Court under Surrogate’s Court Procedure Act 2103 to void the transfer.  The Surrogate, in fact, voided the transfer and found that it was an improper gift and relied on the presumption that “where parties are related… services were rendered in consideration of love and affection, without expectation of payment.”

The Appellate Division reversed the Surrogate’s decision and determined that the children who received the real estate did so pursuant to an agreement with the decedent that their services for the decedent as caregivers would be compensated.  The Court relied primarily upon the affidavits from the three (3) agents who authorized the transfer, including the one child who benefited from the transaction.  The Court found this evidence to be clear and convincing.

As can be seen from Maika, creating a power of attorney may result in actions by agents which are not precisely defined in the power of attorney document.  These acts may lead to controversy and disputes.

I have represented parties in many cases where advance directives and powers of attorney were involved.  Call Me Now for a free confidential review of your estate or guardianship matter.  We offer reasonable and flexible fee arrangements and personal representation.

New York Trusts and Estates Attorney Jules Martin Haas has helped many clients over the past 40 years resolve issues relating to guardianship and probate and estate settlement throughout New York City including the Bronx, Queens, Brooklyn, Manhattan, Nassau and Suffolk County.  If you or someone you know has any questions regarding these matters, please contact me at (212) 355-2575 for an initial free consultation.

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