¶ 
What Is A Monitor
- In New York, a principal may appoint a monitor
- Use for a monitor
- Outside New York
- The role of a monitor may be expanded
- Special purpose solutions
- A monitor does not have a positive duty to act
- Imposing a positive duty to act & supevision
- Issues to consider
¶ In New York, A Principal May Appoint A Monitor
In New York, a principal in respect of a Power of Attorney for a person[1] may identify a monitor, or multiple monitors , with authority to request records of “receipts, disbursements, and transactions” from an agent (§5-1509).[2]
§5-1501 defines a “monitor” as follows:
“a person… who has the authority to request, receive, and seek to compel the agent to provide a record of all receipts, disbursements, and transactions entered into by the agent on behalf of the principal”.
A monitor is not mentioned in the legislation of the other five (5) of the Six (6) Greater States.
On one view, §5-1501 defines the limits of authority of a monitor appointed under §5-1501.
¶ Use For a Monitor
Accepting that a non-durable Power of Attorney assumes that the principal has capacity it seems more likely a monitor would be appointed under a durable Power of Attorney.
Appointing a monitor has cost implications.
A principal might for example, direct that any auditing by a monitor only occur if the principal lacks capacity, however this approach involves more risk.
Wide-ranging auditing seems more likely to reduce any risk of unscrupulous conduct on the part of an agent.
¶ Outside New York
A principal in any of the other five (5) of the Six (6) Greater States might identify an agent with wide auditing powers, including authority of the kind held by a monitor.
¶ Expanding The Role of a Monitor
Forming a view as to the bona fides of the conduct of an agent may require access to records in addition to receipts, disbursements, and evidence of transactions, including:
- records of appointments, resignations, renouncements etc.
- tax lodgements
- correspondence, file notes, calculation sheets, etc.
- advice from third parties (including legal and accounting advice)
- evidence of relevant negotiations
- medical records
A principal in respect of a Power of Attorney for a person[3] in New York may want to define a role for an agent that includes authority to access records of the kind referred to above in conjunction with authority audit the principal’s affairs.
¶ Reciprocal Obligations Upon Agents
Supervisory schemes may include obligations upon the agent, directing an agent to answer questions from a supervisor.
In time, we may see service providers specializing in the taking of audit-related authority under Powers of Attorney, perhaps suitably qualified accountants with appropriate professional indemnity insurance, to add another layer of protection.
¶ Auditing As A Deterrent
Supervisory functions serve a purpose beyond the purely functional.
Extensive audit powers in conjunction with Powers of Attorney present a serious disincentive for any agent who might be tempted to act unscrupulously.
Compare these three designs:-
- regular auditing monthly
- auditing at the election of an agent
- no auditing
Even where auditing might be irregular or uncertain as in the second example above, it is nonetheless a significant deterrent.
Inclusion of audit processes may shift any perception of the part of an agent that anything might go unnoticed.
¶ A Monitor Does Not Have A Positive Duty To Act
It appears that a monitor in New York is not subject to a positive duty to act.
§5-1505 contains the only reference in the legislation to imposition of a positive duty to act and speaks of an agent acting “according to any instructions from the principal or, where there are no instructions, in the best interest of the principal…”
If an agent was appointed as a monitor the position may be different, although an agent already has extensive powers under §5-1508 “to request, receive and seek to compel a co-agent or predecessor agent to provide a record of all receipts, disbursements and transactions entered into by the agent on behalf of the principal.”
§5-1505 provides:
"In dealing with property of the principal, an agent shall observe the standard of care that would be observed by a prudent person dealing with property of another…
… an agent acting under a power of attorney has a fiduciary relationship with the principal…
The fiduciary duties include but are not limited to each of the following obligations…
… to act according to any instructions from the principal or, where there are no instructions, in the best interest of the principal, and to avoid conflicts of interest…"
¶ Imposing A Positive Duty To Act
A prudent principal might require a monitor to promise to perform their supervisory functions.
For example, a principal might enter a separate agreement with a monitor under which they agree to perform their functions.
¶ Issues To Consider
Issues likely to attract attention in terms dealing with a monitor or any agent with supervisory functions include:-
- frequency and scope of audit processes
- review of terms of audit processes
- checks to ensure audit processes completed
Risk management a multi-level process, including review of the risk management process itself.
What is done, what is available to consider when it is done, when it’s done, confirming it was done, reviewing what is done.
Simply appointing someone to ‘review the accounts every three (3) years’ would not be ideal to manage the risks.
Being not a Power of Attorney excluded from the ambit of the legislation - click here to read more. ↩︎
There is space in the government form to identify a monitor in New York (see §1513(i)). ↩︎
Being not a Power of Attorney excluded from the ambit of the legislation - click here to read more. ↩︎