This column first appeared in the San Antonio Express News and other Hearst Newspapers on July 16, 2018.
A Fiduciary must protect the Principal’s interests
Dear Mr. Premack: I had power of attorney over a family friend. She died and now the “relatives” have hired a lawyer requesting documents. What am I supposed to do? – J.S.
I assume that you are saying you were named as Agent in a Durable Financial Power of Attorney issued by a family friend. By naming you as “Agent”, your friend as “Principal” authorized you to assist with financial management. By accepting that authority and acting under it, you became a fiduciary for your friend. You needed to handle her finances in her best interest and according to her instructions while she was alive.
As Agent, under Texas law, you were required to act in good faith, to act within the scope of the authority granted in the Durable Power of Attorney, to act loyally for the Principal’s benefit, and to avoid any conflicts that would have interfered with acting in the Principal’s best interest. Bottom line: when making any decisions, you had to do what was best for your friend and forgo considering your own benefits.
Texas law also requires that as Agent you a) maintain records of each action taken or decision made on behalf of the Principal; b) retain those records until they are delivered to the Principal, you are released by the Principal, or you are discharged by a court; and c) provide an accounting to the Principal whenever she requested an accounting. This accounting requirement can be modified by the actual terms written into the Durable Power of Attorney. But if the requirements are not limited, then by law you had to account a) for any property belonging to the Principal; b) for all actions you took as Agent; c) for receipts, disbursements, and other financial transactions you handled for the Principal; and d) for any liabilities of the Principal. You also had a duty to preserve the Principal’s estate plan to the extent you had knowledge of her plan (and when consistent with her best interests).
If you violated any of your duties, you may be liable for any damages caused by the violation or subject to prosecution for misapplication of property by a fiduciary under Chapter 32 of the Texas Penal Code. Action under the penal code can only be brought by the District Attorney’s office, but a civil lawsuit can be filed by a specific authorized person. That includes:
A) The Principal (but since your friend has died, she obviously cannot raise objections on her own); B) A Guardian or other fiduciary acting for the Principal, like a Trustee of her Living Trust; C) A beneficiary named to receive property upon the Principal’s death, like someone named as “pay on death” beneficiary of an account; D) A government agency with authority to protect the Principal, like Adult Protective Services; and E) Any person who proves to the court that they have sufficient interest in the principal’s welfare or estate. The Principal’s “welfare” can only be a concern while she was alive, but the “estate” exists both before and after her death.
In your situation, “relatives” have requested documents (an accounting) after the Principal’s death. They are entitled to that information only if a) they were named as beneficiaries some asset of the Principal’s, or b) they are beneficiaries of her estate. They can only be beneficiaries of her estate if a) they are named in the Will, or b) the Principal had no Will and they are heirs at law. If any of them are named as Executor in the Principal’s Will, then once appointed by the court, that Executor has the right to an accounting. Random “relatives” need to prove their right to receive information. Unless someone’s right to the information is apparent, you may be best served to inform them that you will provide information only to comply with a court order.
Paul Premack is a Certified Elder Law Attorney with offices in San Antonio and Seattle, handling Wills and Trusts, Probate, and Business Entity issues. View past legal columns or submit free questions on legal issues via www.TexasEstateandProbate.com or www.Premack.com.