I once had a client whose father, a retired executive in Manhattan, suffered a sudden stroke. The family was overwhelmed. His daughter had access to his online banking password to pay bills, but when she tried to liquidate stock to cover his new medical expenses, the brokerage firm refused. Without a durable power of attorney, her hands were tied. Her father was incapacitated and could not grant her authority, and his assets were effectively frozen until a court appointed a guardian—a long and public process.
A Power of Attorney (POA) is one of the most fundamental documents in estate planning, yet it is also one of the most misunderstood. It is not a permission slip. It is a profound grant of authority, allowing a person you designate—your “agent”—to step into your financial shoes. Understanding the scope and, more importantly, the limitations of that authority is critical.
The Agent’s Role: Stewardship, Not Ownership
When you name an agent, you are entrusting them with the stewardship of your financial life. The most critical type of POA we draft for clients is a durable power of attorney. The word “durable” is key—it means the document remains effective even if you become incapacitated, as my client’s father did. A non-durable POA, by contrast, becomes void the moment you can no longer make decisions for yourself, defeating the purpose for most planning situations.
Your agent’s authority is defined by two things: the document itself and New York law. The agent owes you a fiduciary duty, the highest standard of care in our legal system. This means they must act in your best interest, with prudence and undivided loyalty. They cannot mix your assets with their own, they cannot engage in self-dealing, and they must keep meticulous records of every transaction they make on your behalf.
This duty is codified in law. New York’s General Obligations Law § 5-1505 explicitly requires an agent to act according to your instructions or, if none are given, in your best interest. It also requires them to avoid conflicts of interest that would impair their ability to act solely for your benefit. This is not a moral suggestion—it is a legal command.
What Your Agent Can and Cannot Do
A standard New York Power of Attorney grants an agent broad powers to handle financial matters. This typically includes the authority to:
- Manage banking and investment accounts
- Pay bills and handle debts
- File and pay taxes
- Buy, sell, or manage real estate
- Deal with government benefits like Social Security or Medicare
Some powers are so significant they must be granted explicitly. The most common area of dispute I see in my practice involves gifting. Your agent cannot simply start writing checks from your account to your children or themselves unless you give them that specific power. To authorize gifting, you must execute a Statutory Gifts Rider (SGR) alongside your POA. This separate document details exactly who the agent can make gifts to, under what circumstances, and for how much. Without it, any gift an agent makes could be considered a breach of their fiduciary duty and potentially be clawed back by a court.
When Authority Is Abused or Needs to End
A Power of Attorney is a private agreement, but it is not without oversight. If you are mentally competent, you can revoke a POA at any time. The revocation must be in writing, signed, and delivered to the agent and any financial institutions that have a copy of the original document.
The more difficult scenario arises when a principal is incapacitated and family members suspect an agent is misusing their power. Perhaps funds are disappearing, or property is being sold for less than market value. In these cases, family members or other interested parties can initiate a special proceeding in court to compel the agent to provide a full accounting of their actions. If the court finds the agent has breached their fiduciary duty, it can revoke the POA, remove the agent, and even order them to repay any misappropriated funds to the principal’s estate.
Choosing an agent is therefore a decision of immense trust. It should be someone who is not only honest but also organized, responsible, and capable of managing financial affairs prudently. This is not a role to be given as an honor. It is a job with serious legal responsibilities.
If you are considering whom to appoint as your agent or have been asked to serve as one, understanding the duties involved before a crisis hits is critical. We often schedule consultations specifically to review the powers and obligations outlined in a Power of Attorney document so that both the principal and the agent are clear on their roles.
