Dear Mr. Premack: My friend has signed a Will naming me as Executor, and a durable power of attorney naming me as Agent. He has now been diagnosed with cancer. We do not have “legal” or “familial” status as though we were married or as though I was his daughter. Should we put his assets in both our names with right of survivorship? What are the advantages and disadvantages of doing that? – SJO
You are right to be asking these questions before taking any action. Your status is a very important issue here because the authority that you may exercise is related directly to that status, and the legal limits to which that status subjects you.
You identify your relationship as “friends” and not as family. In truth, that has little bearing on what you may do on his behalf. If you were his daughter, you would have no automatic legal right to manage his property or to make his decisions. That power is vested in him alone, but may legally be delegated by him to others.
For instance, you are Agent under his durable power of attorney. He voluntarily gave you that status, and he may withdraw that status by revoking the power of attorney any time he desires. As his Agent, you have a legal fiduciary duty to act in his best interests, to adhere to his wishes, and to stay within any other limits he imposed in the written power of attorney.
Which bring us to your question: “should we put his assets in both our names with right of survivorship?” The first part of the answer is that you, acting alone or acting as his agent, should not make that change to his assets. On the other hand, he may certainly make that change if he so desires… but when he makes it, it involves you in your individual status, not in your status as Agent or as Executor.
It is his property, and he can decide how to dispose of it. In fact, his Will contains instructions for the disposition of his property upon his death. As Executor, you are bound by his instructions. If the Will states that his property passes to A, to B and to C, then you as Executor are bound to deliver it to them.
An important legality is that rights of survivorship, when set up in the proper legal fashion, supersede and take priority over the terms of a Will. Thus, if you as his Agent were to modify his accounts to make them joint with right of survivorship to you, the new arrangement trumps the prior arrangement in his Will. Those heirs may then have grounds to challenge the change, claiming that you have exceeded your authority under the durable power of attorney.
There are two exceptions: First, he may have already named you as the sole devisee under his Will. If so, changing the accounts does not change his instructions. Rather, it just simplifies the procedures that you will have to follow after his death. Second, he may have included in the durable power of attorney very explicit wording authorizing you to change his accounts, to set up survivorship rights and to make gifts from his property. If so, you may be acting within the authority granted to you.
The last possibility is one that I’ve already mentioned: that despite his cancer he is competent and he decides to change his accounts to make them joint with right of survivorship. He may do so, and you will have to sign the bank contracts along with him. If your question is “should he?” the answer is this: if he wants you to own the accounts as your own property when he dies, with full intent that you keep the money for yourself and no one else, then he should make the change.
But if he wants the money to go to someone else (under his Will) and hopes to streamline the process by giving you survivorship rights, the answer is that he should not make the change. Instead, he should let the Will divide the assets and let you, acting as his Executor, carry out those instructions.
Paul Premack is a Certified Elder Law Attorney and a Five Star Wealth Manager (Texas Monthly Magazine 2009-2013) practicing estate planning and probate law in San Antonio.
Original Publication: San Antonio Express News, July 16, 2010