This column first appeared in the San Antonio Express News on July 14, 2016.
A Power of Attorney delegates authority from one person (the Principal) to another (the Agent). The Agent is a fiduciary for the Principal, and must always put the best interest of the Principal above any other consideration.
Further, the Agent must act within the scope of the powers granted in the Power of Attorney. If a particular action is not authorized, the Agent may not perform that action. As such, before any action can be judged proper or improper, we must know a) what the Power of Attorney document says, and b) whether the Agent’s actions are in the Principal’s best interests.
Finally, the Principal must have adequate legal capacity to sign a Power of Attorney. This means that the Principal must understand the reason for entering into the transaction, must appreciate the consequences of the action, and must be acting consistently with long-term commitments and values. A person in hospice, four days from death, may have such capacity; but it is likely to be diminished and should be examined closely.
You say that your step-mother used the Power of Attorney to transfer assets into her name before your father died. To have that authority, the Power of Attorney must explicitly grant her as Agent the power to make gifts to herself individually. The gifting power must not be limited to the annual exclusion of $14,000. The Power of Attorney must make it clear that it is not a breach of fiduciary duty to divest the Principal of all his assets. The action must also be consistent with his wishes. If his Last Will and Testament did not make her his sole heir or if this new Power of Attorney contradicted a prior one, then her actions may have been a breach of fiduciary duty.
Whether her actions were legal or not is a fact question. This is certainly a situation that calls for investigation of the facts. You could start with Adult Protective Services (APS) to see if they could determine whether her actions were exploitation of your father. APS may decline to help since he has died and cannot benefit from their services. In the alternative, you can hire an attorney experienced in litigation and fiduciary duty law.
Creating a Power of Attorney is a vital and important part of estate planning. However, it should be created when the Principal is healthy and of clear mind. It is quite difficult to reverse wrongful actions by an Agent, hence selection of an Agent who will take their duties seriously is of the utmost importance. Additionally, requiring the Agent to account to the Principal and another third party (like the alternate Agent) may enhance honesty. Always work with a qualified Attorney when creating important legal documents, and create them now while strong and healthy.
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.