The New York Power of Attorney allows a person, known as the principal, to select an agent or agents and to give the agent authority to act on behalf of the principal. For example, one of the designated subjects in the Power of Attorney form provides that the agent may act with respect to “banking transactions”.
New York recently enacted legislation that provided major changes to the Power of Attorney form. These changes became effective on September 1, 2009. One of the new provisions of law now requires that the Power of Attorney form be signed and acknowledged by both the principal and agent. A major impetus for the Power of Attorney revisions was to limit the possibility of abuse by a named agent. Financial abuse of the elderly and incapacitated persons often requires Court intervention to undo the agent’s wrongful conduct.
One recent brazen example of the breach of fiduciary duty by an agent under a Power of Attorney appears in the case of Estate of Frances E. Francis, decided by Westchester County Surrogate Anthony A. Scarpino, (New York Law Journal, Tuesday July 13, 2010 at page 27). In Estate of Frances, an individual named Donald Maloney arranged for Frances E. Frances, who was then 98 years old, to sign a Power of Attorney naming Maloney as agent. Maloney then used the Power of Attorney to transfer Ms. Frances’ assets for his own benefit in the sum of over $600,000.00. Following Ms. Frances death, the Administrator of her estate commenced a discovery proceeding to ascertain the whereabouts of the decedent’s assets and, to ultimately recover same. The Court voided the transfers to Maloney that were effectuated by use of the Power of Attorney and directed Maloney to file an accounting and return all of the funds to Ms. Frances’ estate.
Maloney, however, failed to abide by the Court’s decision which resulted in the Court finding Maloney in contempt of the Court’s directives. The Court also ordered the issuance of a warrant of commitment if Maloney continued to fail to comply.
Estate of Frances is a stark reminder that the execution of Power of Attorney and the selection of agents and other fiduciaries such as Executors and Trustees requires careful consideration. Not only did an unscrupulous agent abscond with an elderly person’s fortune, court intervention and directives appear not to have been enough to rectify the abuse.
A Power of Attorney can be an important part of an estate and elder plan and can provide a means to effectuate property transactions that greatly benefit the principal. Unfortunately, when fiduciary duties are ignored the results can be disastrous.
Jules Martin Haas, Esq. has been representing clients in New York Guardianship, Probate and Estate Administration proceedings throughout the past 30 years. If you or someone you know is involved with or has questions about a New York Power of Attorney, Surrogate’s Court Discovery Proceeding or other aspects of Probate or Estate Administration, please contact me at (212) 355-2575 for an initial consultation.