Power of Attorney Abuse: What to Do When an Agent Misuses Their Authority

A power of attorney is one of the most important documents in any estate plan. It allows a trusted agent to step in and manage another person's finances, property, or healthcare decisions when they cannot act for themselves. Most of the time, this arrangement works exactly as intended. Unfortunately, the same authority that makes a power of attorney so useful also makes it a target for abuse when the person holding it puts their own interests ahead of the principal's.

If you suspect that an agent is misusing a power of attorney, whether the principal is your parent, spouse, or another loved one, understanding the warning signs and the legal options available in New Jersey can help you act quickly and protect what matters most.

What Counts as Power of Attorney Abuse

An agent under a power of attorney, sometimes called an attorney-in-fact, owes a fiduciary duty to the principal. That means the agent must act with the highest standard of good faith and loyalty, using the principal's assets only for the principal's benefit unless the document specifically authorizes something else. New Jersey courts have made clear that an agent cannot simply gift themselves the principal's property without explicit, written permission to do so.

When an agent strays from that duty, it can look like several things. Some of the most common examples of abuse include unexplained withdrawals or transfers from bank accounts, credit cards used for the agent's personal purchases, real estate quietly transferred into the agent's name, new loans taken out against the principal's property, or sudden changes to beneficiary designations that happen to benefit the agent. Isolating the principal from family members who might notice these changes is another red flag that often accompanies financial exploitation.

These warning signs frequently overlap with broader patterns of elder abuse and undue influence, particularly when the principal has some level of cognitive decline. Our earlier post on how to protect a vulnerable family member's estate plan goes into more detail on recognizing manipulation and pressure aimed at an older or ill relative, and it is worth reading alongside this one if you are worried about a parent or grandparent.

Steps to Take If You Suspect Abuse

If you believe an agent is misusing their authority, the first priority is confirming the principal's safety and wellbeing. From there, a few practical steps can make a significant difference in protecting assets and preserving your legal options.

Start by locating the actual power of attorney document so you know exactly what authority was granted and what limits, if any, apply. Next, gather as many financial records as you can, including bank and brokerage statements, credit card bills, and any deeds or loan documents connected to the principal's property. Building a timeline of transactions often reveals patterns that are not obvious from a single statement.

You can also request a formal accounting from the agent. New Jersey law allows a principal, guardian, or certain family members to demand that an attorney-in-fact account for how they have used their authority, and the Superior Court can compel an accounting when an incapacitated principal's affairs raise concerns. An agent who refuses to provide records or becomes evasive when asked simple questions is often signaling that something is wrong.

Adult Protective Services can investigate suspected financial exploitation of an older or vulnerable adult and coordinate protective services, though it generally cannot freeze accounts, remove an agent, or order an accounting on its own. For those remedies, court intervention is usually necessary, which is where working with an estate litigation attorney becomes important.

Legal Remedies Available in New Jersey

New Jersey courts have several tools to stop ongoing abuse and recover assets that have already been taken. A principal who still has capacity can revoke a power of attorney outright and execute a new one naming a different agent. When the principal lacks capacity to revoke the document themselves, family members can petition the court for guardianship, including temporary guardianship, to give a trustworthy person authority to act and to prevent further dissipation of assets while the matter is resolved. Our post on the role of guardianship in estate planning explains how that process works in more detail.

Courts can also impose asset restraints to freeze accounts or halt further transfers while an investigation or lawsuit is underway, and a lawsuit for breach of fiduciary duty can seek to recover money or property the agent improperly took. If the abuse only comes to light after the principal has passed away, an estate's personal representative can investigate suspicious transfers made under the power of attorney and pursue claims against the former agent, sometimes alongside a broader will contest if the same person also influenced the principal's estate planning documents.

Preventing Abuse Before It Starts

The best protection against power of attorney abuse is careful planning from the outset. Choosing an agent based on trustworthiness rather than convenience, naming a backup agent, and pairing a financial power of attorney with a properly executed healthcare directive all reduce the risk that one person gains unchecked control over a loved one's affairs. Periodic check-ins with an estate planning attorney can also catch problems early, before small irregularities turn into significant losses.

If you are concerned that an agent is abusing their authority under a power of attorney, or you want to put stronger safeguards in place before granting one, the elder law and estate litigation attorneys at Borenstein, McConnell & Calpin, P.C. can help you evaluate your options and take action. Contact our office to schedule a consultation and discuss the situation with an experienced New Jersey attorney.

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