CSG Law Alert: An Attorney-in-Fact’s Duty to Account Under a New Jersey Power of Attorney

In a power of attorney, a principal names another person as his or her attorney-in-fact with authority to take actions on behalf of the principal.  N.J.S.A. 46:2B-8.13 governs an attorney-in-fact’s duty to account. An action to compel an accounting is brought in summary manner by filing a verified complaint and order to show cause. R.4:83-1 et. seq.

The attorney-in-fact has a duty to maintain accurate books and records of all financial transactions. N.J.S.A. 46:2B-8.13(b). Individuals who may seek an accounting from the attorney-in-fact include the principal, a guardian or conservator appointed for the principal and the executor or administrator of the principal’s estate.  N.J.S.A. 46:2B-8.13(b).  An heir or other person may also make an application to the Superior Court for an accounting if the Court finds that the principal is incapacitated and there is doubt or concern whether the attorney-in-fact is acting properly and solely for the benefit of the principal. N.J.S.A. 46:2B-8.13(b).

In the three cases discussed below, interested parties sought to compel an accounting pursuant to N.J.S.A. 46:2B-8.13.  As these cases show, it can be difficult to meet the burden of proving that an attorney-in-fact violated his or her duty to account.

  1. In Webb v. Webb, 2007 WL 517345, Sarah (“Sally”) and James (“Jim”) Webb were the adult children of Patsy Douglas Webb (“Patsy”) and attorneys-in-fact under Patsy’s power of attorney. Sally filed an action seeking the removal of Jim, reimbursement of funds she spent on Patsy’s maintenance, money damages and an inventory and accounting. Jim filed a counterclaim seeking to force Sally to provide an accounting, reimbursement of funds he expended on Patsy and counsel fees. The Court appointed a guardian ad litem (“GAL”) for Patsy. The GAL filed a motion to remove Sally as an attorney-in-fact because Sally’s representation of Patsy was “flawed by conflicts of interest.”  The Court agreed and Jim settled the case with the GAL.  In approving the settlement, the Court found that “the probable return for prosecuting this case weighed against the definitive expenditure of substantial sums leads this court to conclude that the settlement should be approved.” Id. at *4.  The Court also noted that the major dispute was between Sally and Jim and the dispute should not be litigated at the expense of Patsy. Id. at *8.
  2. In the Matter of the Estate of Lillian Schmidt, 2012 WL 2809503, Loel Welch (“Loel”) appealed the approval of an accounting prepared by John Teagno (“John”) who had been attorney-in-fact for a deceased person, Lillian Schmidt (“Lillian”). Loel and John were Lillian’s niece and nephew and her Will made bequests of $20,000 to each of them. The Court found that John, an admittedly poor record keeper, failed to maintain accurate books and records, but his accounting was nonetheless accurate. Id. at *2. The Court affirmed the denial of attorneys’ fees for Loel because she did not establish a breach of any fiduciary duty and “the estate was not at all enhanced by the years’ long unsuccessful litigation effort.” Id. at *3.
  3. In the Matter of the Estate of Rosalie Jean Ryan, 2021 WL 5630394, the five Kirschling brothers appealed from a bench trial awarding them each $15,000 in an action wherein they sought an accounting from Veronica (“Bonnie”) Kirschling who was attorney-in-fact under a power of attorney for their aunt, Rosalie Jean Ryan (“Rosalie”). The Court found more than $250,000 in “unexplained” transactions but the Court would only consider transactions dating back to May 13, 2010 after finding that caring for Rosalie and failure of the brothers to sue earlier left Bonnie without the records necessary to defend herself. Id. at *5. The Court noted that by designating the transactions as “unexplained,” there was no wrongful taking of Rosalie’s assets.  Id. at *6.

To summarize, while a suit to compel an accounting can be filed, in general New Jersey Courts tend to approve an attorney-in-fact’s account despite errors and poor bookkeeping if there is no breach of fiduciary duty and as a result of the litigation the parties in interest are needlessly depleting the principal’s assets.

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