When the Power of Attorney Acts Badly. . .Now What?

        When Aunt Gertrude appointed her niece Milly to be her attorney in fact through the Power of Attorney document, she never dreamed she would have to consider what to do if she suspected her niece was not doing the right thing. “That’s Milly. . .she would never do anything to hurt me,” Aunt Gertrude thought.“Why, I’ve known her since she was born. She’s family” So Aunt Gertrude didn’t ask the attorney if there was any sort of “oversight” built in to the Power of Attorney document they were both signing at the attorney’s office that day. She didn’t think she would need it.

        The truth is, when anyone executes a Power of Attorney document and appoints their niece Milly, their son, or their best friend, they are putting their trust in that person. The attorney in fact does not have a duty to report their actions to anyone, unless the Power of Attorney document they sign has some oversight built into it. And, sadly, the Power of Attorney documents which 99% of us have signed do not have any oversight built into them.

        Here in the Commonwealth of Pennsylvania, we have an “Agent’s acknowledgment” which the attorney in fact or agent is required to sign. It essentially says “I promise to do the right thing.” (That may be a too-loose translation, but you get the idea)[1] The agent, however, is not required to reveal any of his or her actions to anyone.

        At Mateya Law Firm, we have changed that. We have added language which requires the agent to produce a written record of any and all the actions taken on behalf of the principal. The concept is built on the same logic as “good fences make good neighbors.”

       We would be happy to explain to you how a power of attorney document can help you, and how it can help protect against the nefarious “Niece Milly” in your life.

[1] The agent’s acknowledgement requires the agent to act for the benefit of the principal, keep assets of the principal separate from my assets, exercise reasonable caution and prudence, keep a full and accurate record of all actions, receipts, and disbursements on behalf of the principal.

What Happens When the Attorney in Fact Won’t Act?

           Mom is being cared for by her attorney in fact (the person who is appointed through the power of attorney document).  The attorney in fact tries to do his best in caring for Mom, but there is a problem. . .a sibling who doesn’t want the attorney in fact to be there to help Mom.

            Let’s suppose that our Aunt Gertrude was being helped by her niece Milly, as in our earlier discussions. Aunt Gertrude appointed Milly because she trusted her to make the best decisions for her that she could. Let’s suppose further that Milly has always acted in Aunt Gertrude’s best interests. But now Aunt Gertrude is not doing so well physically, and Milly needs to be at her home more frequently. If something prevents Milly from being there, say another family member who actually threatens Milly, what should Milly do?

            If Milly stands up to the bully, she can likely have the bully removed from the situation.

            But what if Milly is bullied herself? What if she decides, ‘it isn’t worth the fight’ to take some action to try and help Aunt Gertrude. Then what happens?

            There are a few things that could happen:

§  Aunt Gertrude could speak up for herself. If, however, the bully is there, she may be afraid to do so.

§  The bully could simply run roughshod over Milly and Aunt Gertrude, taking advantage of the situation for her own use.

§  Another family member who sees Aunt Gertrude being bullied by Milly could try to help out.

§  Or – the family member could tell Milly that if she doesn’t stand up for Aunt Gertrude, she will file an action to have Milly removed from the power of attorney document. This is a drastic (and not always successful) step, but it is a way of bringing the actions of the bully out into the open.

            The power of attorney document is meant to be a shield. When it is not used in that way, it can become as powerless as the person who holds it.

            Watch your senior citizen friends and relatives closely. Be sure that the POA document they signed is benefitting them.

Selling a Property with a Power of Attorney Document

– Why Does the Bank Want Something More?

So Aunt Gertrude has named her Niece Milly as her attorney in fact through the power of attorney document. Suppose Aunt Gertrude wants to sell her house, but because of infirmity, she is unable to go to the bank to take care of any financial arrangements, or to the realtor’s office for the closing. Is the power of attorney document she already executed sufficient to allow Milly to show up at the closing and to sign the myriad of papers required to sell a home today?

The answer is “probably.”

Recently (within the past two years), some banking and other financial institutions are requiring very specific language in a power of attorney document in order to complete real estate transactions. At first blush, the document the bank is handing you looks nearly identical to the fully executed power of attorney document you handed to them (just before they refused it).  These institutions are trying to protect themselves.

If Aunt Gertrude is not careful, she may not be able to sell her house after all. Not because she doesn’t want to sell it, or because she doesn’t have a willing buyer, or because the buyer does not have the money. No, it could be because the power of attorney document, though it was thoroughly written and is perfectly legal, does not make this particular financial institution happy.

So what is the moral of the story? If you or a loved one is selling or buying real property (i.e., real estate with or without a building on it), show the power of attorney document to the lender at least thirty days in advance of the closing date.  That way, if your lender wants to have you execute their own version of a power of attorney document, you will have time to take the “special” document to your attorney for his or her review and execution, and the closing date will not have to be rescheduled (and the sale of Aunt Gertrude’s house).  

Keep sending us your feedback. We will try to incorporate some of your questions into the upcoming adventures of Aunt Gertrude and her niece Milly.

Should Your POA Be Paid?

       Aunt Gertrude, our elderly character, and her niece Milly, the attorney in fact through Aunt Gertrude’s Power of Attorney, face life every day, just like you and I do. The difference is that there is this added level of responsibility for Milly. She not only takes care of her own life, her own needs, and her own dreams, but she is the attorney in fact for her Aunt Gertrude. So what does that mean to Milly? What added responsibility does Milly carry? And what does Milly get for taking on this burden?

       How about payment?

       This step is often completely overlooked. Aunt Gertrude and Milly could make a fair arrangement of payment-for-services.  In most cases, Power of Attorney documents are drafted as a part of a complete package of protective documents – Last Will and Testament, Living Will, Medical Directives, Power of Attorney, and so on.  Payment is not a consideration when you are discussing the creation of a ‘safety net.’

       You should be aware, however, that it is completely within the bounds of the law for a principal (here, Aunt Gertrude) to pay an agent (here, the attorney in fact, Niece Milly) for work that is performed by the agent on behalf of the principal.

       So what is fair?

       The answer to that is as diverse as our great country is diverse. Aunt Gertrude and her Niece Milly are free to negotiate any agreement they like. Perhaps if they approach this subject now, before any misunderstandings occur, they will be less likely to have a ‘cat fight’ later if a problem occurs between them (like Milly helping herself to something that, perhaps, is more than her dear Auntie would have liked – like her MONEY!).

       This topic is a new one within the power of attorney discussion. We’ll move this along a little further the next time.

        Continue to send us your comments. . .we’re having a little trouble allowing the comments to be shared online. We see them, but now (if we can finagle the technology) we are going to allow you to see them, too!

So Aunt Gertrude Needs Help. . .?

           Most of us have an “Aunt Gertrude” who needs someone to help look after them.  Perhaps she’s a little less spry than she used to be. Perhaps she is less clear than she used to be when you talk to her. You wouldn’t want her to have to live in a nursing home, but you can’t have her living in your home.  So what do we do?

That’s where Aunt Gertrude’s niece Milly comes in. Milly is willing to help, and will do anything she can to help dear Aunt Gertrude. And when we’re at the Christmas dinner with the family, and we hear “Milly took Aunt Gertrude to the attorney, and now she is helping her. She’s the ‘power of attorney’ for Aunt Gertrude.”

We think,  “Awww. Isn’t that nice? We’re so happy that someone stepped up to help.” And we move on to the next topic, or the next course of our meal.

But not Aunt Gertrude. Her life is now in the hands of someone else. She can’t outrun Milly, she can’t out-think Milly. She is completely dependent on Milly’s good character. There are a few problems with this scenario.

First, what if Milly has ulterior motives? What if she doesn’t have Aunt Gertrude’s best interests at heart?  Second, where is the oversight? Who is watching Milly? No one.

At Mateya Law Firm, we have worked with attorneys, bankers, financial investors, and accountants around the state to create a power of attorney document which gives the attorney-in-fact (the name of the person who is appointed through a power of attorney document) all the powers that are available under the Pennsylvania Statutes, but also has an automatic oversight clause, written directly into the document. We can help you strengthen your power of attorney document. Contact us. We can help.

A Limited Power of Attorney

       A power of attorney document can be drafted without limitations, such is a durable power of attorney. It can also be drafted with limitations, a limited power of attorney. There are advantages to a limited power of attorney. I will discuss a few of the more common limited powers which I have seen.
       First, an Attorney-in-Fact’s powers can be limited by time. If you know you will be out of the country for a certain amount of time, the power of attorney document can state that it is valid “until I return to Cumberland County sui juris (in my right mind).” This may help when your physical  absence and the assistance you need go hand-in-hand.

An Attorney-in-Fact’s powers can be limited in scope. For example, if the powers included are financial, you may wish to give your Attorney In Fact the power to write checks on your account “not to exceed five thousand dollars in any twenty-four hour period.”

The particular facts of your situation may also guide how the power of attorney document is drafted. I recall one such incident where the Principal was travelling out of the country and needed someone to transact one particular piece of business for him. His cousin was his chosen Attorney in Fact because his cousin was in the same business. The problem was he didn’t trust his cousin very far.

We drafted a power of attorney document which empowered his cousin to take action as it related to this very narrow issue, up to a certain dollar amount, until such time as he (the Principal and Grantor of the power of attorney) returned to his home country, sui juris. It was as close to an ‘insulting’ power of attorney document as I ever drafted. The cousin was not insulted, however, as he stood to make a nice profit when the deal went through.

So before you zoom out and use a software package or a web site to download a power of attorney document, consider carefully what limitations you would like. . .and have your estate planning attorney craft just exactly what you need.

Revoking Power of Attorney

     Suppose we have to remove an attorney in fact. Suppose that Aunt Gertrude’s attorney in fact, her niece Milly, has been less-than-honest with her Aunt Gertrude. How does Aunt Gertrude go about removing her? Every state has different laws, so your Aunt Gertrude will have to be sure that she is taking actions which work for her situation and in her jurisdiction.   

     The first thing to know is this: You may remove your attorney in fact as long as you are in your right mind (sui juris).  In civil law the phrase sui juris indicates legal competence, the capacity to manage one’s own affairs. 

      Don’t let anyone tell you that now that I’m your “Power of Attorney, you can’t tell me what to do.”  You are still the boss.

      Next, you have the right to appoint anyone you trust. It does not have to be a family member. And you can make the change for any reason, or for no reason at all. The choice is yours.

      Finally, to remove the person appointed as your attorney in fact, notify him or her, preferably in person and in writing. Have your attorney notify them as well.  

      Aunt Gertrude should tell Milly that she is no longer her attorney in fact. Aunt Gertrude should write to Milly, certified mail if possible. And Aunt Gertrude’s attorney, if it’s not too much trouble, should contact Milly, via writing, that she is no longer the attorney in fact for Aunt Gertrude.

      Sound like too much work? Then, at least tell Milly of the change, and tell your bank, the place where the money resides. They can help you from there. Your local County Office of Aging can also help you. Aunt Gertrude can make the change. She might need your help. Be there for your Aunt Gertrude.