| Dear Mr. Premack: My uncle never married. He
was mourning his sister, and was a bit mentally confused and on kidney
dialysis, when he granted a nephew Power of Attorney. The nephew assigned
himself pay-on-death rights to $230,000, even though uncle’s Will said the
estate was to be divided among 10 nephews and nieces. When uncle died,
that nephew took it all. Our aging population is a vulnerable target when
they need help managing affairs. How do you check performance once you've
appointed someone as an Agent? – MV via Email You have posed a very
complex question. Answers have been debated by very intelligent and
well-trained minds, and no single solution has been found. Whenever an
elder becomes mentally frail, that person needs to be cared for and to
have assistance with financial matters.
Using Durable Power of Attorney is a very common way to select a
caretaker (called an Agent) and to give that Agent legal authority to
manage the elder’s affairs. Other options include court-supervised
Guardianship – which can be slow, expensive and burdensome – or a Living
Trust – in which a professional manager can be appointed. Each has its own
pros and cons.
But your uncle relied on a power of attorney, and you ask how to check
performance of the Agent once the powers are granted. The same question
was asked by the Texas legislature this year. They came up with two
changes to Texas law.
First, House Bill 1813 (effective on September 1, 2001) changes the
Texas criminal statutes. If the Agent in a power of attorney
intentionally, knowingly, or recklessly misapplies the principal’s assets
– that is, uses them in a way that is not beneficial to the elder or in a
way that contradicts the power of attorney – the act can be investigated
as a crime.
The offense is called "misapplication of fiduciary property." If
convicted, the Agent’s punishment is keyed to the value of the misapplied
assets. For instance, if the amount is less than $20, the crime is
classified as a Class-C misdemeanor, punishable by a fine no greater than
$500. It reaches the level of "state jail felony" if the amount is between
$1,500 and $20,000. And if the amount misappropriated exceeds $20,000 it
is a first-degree felony – punishable by 5 years to life in prison and a
$10,000 fine.
Second is House Bill 1883, also effective on September 1, 2001. As it
was first introduced, this bill would have required every Agent to post a
bond, would have required a waiting period before the Agent could transfer
real estate, and would have required recording of all Durable Powers of
Attorney with the local county clerk’s office. Those are heavy
requirements that would make powers of attorney difficult for everyone to
use, to avoid but a few cases of abuse.
The final version of HB 1883 did not include those requirements.
Instead, it imposes strict accounting requirements on the Agent. It
imposes the duty to keep the principal informed, and to account for
actions taken pursuant to the power of attorney. An Agent is required to
keep a record of each action taken or decision made, and the principal can
ask for an accounting at any time. The agent must provide full details of
all actions taken. If the principal is disabled or confused (like your
uncle), the new law allows him to select someone to oversee the Agent’s
actions by receiving the accountings. If irregularities are found, the
criminal statute may kick-in. |
