When Can You Receive an Accounting By A Power of Attorney?
Yes – You are entitled to an accounting by A Power of Attorney. Pursuant to New York General Obligations Law 5-1505(2)(1), an agent under a Power of Attorney has a duty to the Principal (the person who executed the power of attorney) to act in accordance with the Principal’s instructions, or, where there are no instructions, in the best interests of the Principal.
The agent may not self deal or otherwise act against the best interests of the Principal. Pursuant to New York General Obligations Law 5-1505(2)(2) and (3), the agent must keep the Principal’s funds separate from their own and must also keep a record of all receipts, disbursements, and transactions entered into by the agent on behalf of the principal.
If you or somebody you trust notice that the Agent is not acting in a way that he should, or, if there is suspicion that an agent is not acting as he should and is otherwise misusing the Power of Attorney, then it is possible to seek an accounting by a Power of Attorney.
For example, if you notice that the Agent is writing checks to themselves and you did not include a Gift Rider in your Power of attorney, you may want to seek an accounting by a Power of Attorney. you yourself still have capacity and have noticed that the agent is not acting in your best interests. Alternatively, if somebody is in a nursing home and there is a Power of Attorney who is not paying the nursing home or other bills while an individual is in the nursing home, you may want to request accounting by a Power of Attorney. Yet another example is if the Agent is adding his or her name to your accounts in a “joint” manner rather than “as agent.” In such a case, you may also want to seek accounting by a Power of Attorney.
Who can Seek an Accounting By A Power of Attorney?
New York General Obligations Law 5-1505(2)(3) sets forth a list of individuals who may seek an accounting by a Power of Attorney. These individuals are:
(i) a monitor;
(ii) a co-agent or successor agent acting under the power of attorney;
(iii) a government entity, or official thereof, investigating a report that the principal may be in need of protective or other services, or investigating a report of abuse or neglect;
(v) a guardian ad litem appointed pursuant to section seventeen hundred fifty-four of the surrogate’s court procedure act;
(vi) the guardian or conservator of the estate of the principal, if such record has not already been provided to the court evaluator or guardian ad litem; or
(vii) the personal representative of the estate of a deceased principal if such record has not already been provided to the guardian or conservator of the estate of the principal.
What Information is Provided in an Accounting by Power of Attorney?
Again, pursuant to New York General Obligations Law 5-1505(2)(3), the agent must keep a record of all receipts, disbursements, and transactions entered into by the agent on behalf of the principal and to make such record and power of attorney available to the principal or to third parties at the request of the principal.
As such, the law states that the Agent must provide a record of all receipts, disbursements and transactions. Under a literal reading, it would seem sufficient to provide the bank statements, checkbooks, and receipts. The agent should organize the receipts and invoices that substantiate the transactions, especially the withdrawals.
If the Agent had nothing to hide, presumably the Agent would prepare an accounting in the same way as one would prepare an estate accounting. To that end, the agent would make a spreadsheet of all funds coming in and a list of all assets coming out and provide a cogent list and data to the person who requested the accounting.
What Happens if the Agent does Not Account?
If the agent does not account, then pursuant to New York General Obligations Law Section 5-1510, a Special Proceeding may be brought to compel the accounting and seek other relief, including, but not limited to, removing the agent on the grounds that the agent has violated, or is unfit, unable, or unwilling to perform, the fiduciary duties under the power of attorney.
(By the way, as will be discussion in a subsequent post, in addition to seeking an accounting, a Special Proceeding may also be brought for other purposes, including, but not limited to: to determine whether the power of attorney is valid; to determine whether the principal had capacity at the time the power of attorney was executed; to determine whether the power of attorney was procured through duress, fraud or undue influence)
As an alternative to commencing a Special Proceeding, if the Agent does not provide a record of receipts and transactions, an individual may also commence a Guardianship Proceeding under Mental Hygiene Law Article 81, and, as part of the relief requested, have the Power of Attorney suspended and seek the appointment of a Temporary Guardian. If a Guardianship Proceeding is commenced then the Court Evaluator will review all of the activities of the Agent and report same to the Court.
If it is determined that the Agent converted assets, then the Guardian will be able to commence a turnover proceeding to seek the return of the assets.
We can help you determine whether to seek an accounting of the Agent under a Power of Attorney or file for guardianship in order to best protect the rights of the principal.
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