This blog is part 2 of a series which started with this one: "Re-thinking Power of Attorney Litigation."
My first modest suggestion for power of attorney ("POA") litigation is to fully explore clients' assumptions about the rights and powers of POAs before initiating litigation.
If the aggrieved party uses words like "power", "in charge" and "control" when describing the role of a POA, rather than "duty", "responsibility", "accountability" and "service", it is a sign that the person who wants the job doesn't fully understand the role.
For example, I am shocked by the number of children who believe that as soon as the family home is sold and a parent enters a care setting, that is the time to divide up the house sale proceeds among themselves. They mistakenly think that the POA gets to decide how and when to divide up the parent's money. Not so. The incapable person's money must be carefully managed solely for the incapable person's benefit during his or her lifetime.
Yes, that is true even if the nursing home costs will not exceed the incapable person's income. Yes, that is true even if the children are all counting on their inheritance as a pathway to home ownership and would like to receive at least part of their inheritance early. Yes, that is true even if the parent's dementia has progressed to the point that he or she would not even miss the house sale proceeds.
Another common reason litigants want to be "in charge" is the mistaken belief that a POA can make unilateral decisions without talking to anyone else. POA litigation usually involves high conflict families. The person who wants to be POA or Guardian of Property needs to understand that, if successful, there will be a duty to consult with supportive family members and friends of the incapable person, including the despised sibling.
The Substitute Decisions Act uses the word "consult" to describe this duty on substitute decision makers. This is different from informing after-the-fact. To do the job of POA correctly, the POA will need to share all information relevant to a substitute decision with the incapable person's family members, then listen to their feedback and opinions before implementing a substitute decision. If you are unable or unwilling to communicate effectively with your immediate family members, you are not qualified for the job.
Before initiating POA litigation, I often refer clients to this helpful summary of the duties and obligations of Guardians of Property on the Public Guardian and Trustee's website1.
It is important to fully explore how taking on this 24/7 responsibility will impact the POA's life. Vacations could be interrupted by a call from the nursing home. POAs will face practical problems like banks that won't provide online access to bank accounts and paid caregivers who don't work out. Tax returns to be filed, forms to be filled out, doctor and dentist appointments to be tracked, medications to be managed. The POA will ultimately be responsible to account to the beneficiaries of the incapable person's estate, and possibly the Court, about every transaction during the POA period. A lost receipt could become a personal liability.
These duties and obligations should be fully explored before heading down the destructive and expensive path of POA litigation so that the client has eyes wide open about what "winning" entails.
Footnote
1. Most of the duties imposed on Guardians of Property are also applicable to fiduciaries acting under a power of attorney, the primary distinction being that a Guardian of Property will be obligated to act in accordance with a Management Plan and will have to pass accounts to the Public Guardian and Trustee by a particular deadline.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
