WHAT TO DO WHEN SOMEONE ABUSES A POWER OF ATTORNEY

Providing someone a power of attorney to act on your behalf is part of a good estate plan. Sometimes though, usually when you are elderly and need help handling your finances, or become incapacitated, the person you selected abuses the power. This can lead to dispute that may arise during your life or after your passing.

What is a Power of Attorney

A Power of Attorney is usually a statutory form wherein an individual can appoint a person or persons to act on the individual’s behalf to make financial decision during the lifetime of the individual. The person who has to power to act is sometimes called the “attorney-in-fact.” This person is not an attorney, but is permitted to act on behalf the individual for financial decisions outlined in the Power of Attorney. You would have to properly execute the Power of Attorney to be valid and most of the time requires either a notary or witnesses. Most importantly, you have to have the capacity to execute the power of attorney.

The Powers delineated in the Power of Attorney can be narrow or broad. The Power of Attorney can allow the attorney-in-fact to make banking decisions, real estate decisions and even gift making decisions. These powers have to be expressly allowed in the Power of Attorney especially pertaining to gift giving, which can require additional witnesses and signatures of the individual to make sure the individual knows she or he is giving this right to the attorney-in-fact.

Most of the time a Power of Attorney is durable, meaning that it is valid while the person is alive and well, and while the person is incapacitated. There are other power of attorneys, sometimes called a springing power of attorneys, which only takes effect when a person becomes incapacitated.

Where Disputes Arise

Where dispute mostly occur is when the attorney-in-fact acts outside what is permitted in the power of attorney. This almost invariably occurs when the attorney-in-fact is accused of self dealing (using the individual’s money for their own purposes rather than for the benefit of the individual). Other disputes arise when there is a claim that the individual lacked capacity to execute the power of attorney.

Who can Make a Claim Against An Attorney-In-Fact alleged to have abused the Power

During the lifetime of the individual, the individual who executed the Power of Attorney can revoke the power and/or make a claim against the attorney-in-fact if there is alleged an abuse of power. Unfortunately, what happens is the individual becomes incapacitated and cannot make the claim. Many family members want to make the claim on the individual’s behalf, but they do not have standing to do so (the right to do so) while the person is still alive. In order to receive standing, a family member would have to commence a guardianship proceeding to become the guardian or conservator of the individual.

If the individual who executed the power of attorney is deceased and family members believe that there was an abuse of power, then the personal representative of the estate can make a claim against the former attorney-in-fact. In many circumstances the attorney-in-fact is the same person as the personal representatives. In this case, other family members can motion the court to remove the personal representative arguing a conflict of interest and have the court appoint a successor personal representative.

Feel free to contact me for further discussion. dbosco@boscolegal.com; (212) 201-1908. Also feel free to connect with my on LinkedIn. https://www.linkedin.com/in/damienbosco

SEVEN REASONS WHY ESTATE ADMINISTRATION CAN BE ANNOYING

When a close relative dies, usually there is a period of mourning and loss followed by the need to handle the person’s estate. In most cases an estate administration proceeding is necessary to distribute the assets to beneficiaries or heirs of the decedent. Exception could be because of a low valued estate or because assets are held as non-probate assets (e.g., assets held in trust, or jointly with rights of survivorship, or with a beneficiary designation). In any event, when an estate proceeding is necessary, a petitioner has to seek administration of it.

When there is a Will, the named Executor in the Will should be the petitioner. When there is not a Will, then an heir has to petition the court to be the estate administrator of the estate.

Sometimes the petitioner attempts to handle the paperwork on their own because either it is a small estate or the petitioner wants to save on attorneys fees. Almost in all cases, the petitioner realizes what a pain it is to complete the forms and to petition the court to probate the Will or administer of the estate. It may at first seem to be very simple to do, but there can be many annoyances along the way when administrating the estate.

Here is a list of seven annoyances:

1. The numerous forms to complete can be confusing or a mistake is easily made;
2. The clerks who approve the paperwork may have different opinions or knowledge levels;
3. Service on heirs of a citation to appear in court may be difficult when heirs are unknown or their addresses are unknown;
4. Disputes arise for among other reasons because there is an objection to the will or to the one handling the estate;
5. Collecting assets may be difficult because they may not be easily locatable among various jurisdictions;
6. Distributing assets is difficult because it is hard to sell something (i.e., can’t get a good price or the market is down) or can’t agree on an appraised value of something or someone is objecting to an account.
7. An estate is left open because some loose end that cannot be resolved easily.

Even the most proficient of persons handling these matters have to deal with these issues. That is why an executor or an administrator usually hires an attorney because of the attorney having experience in dealing with these issues on an ongoing basis on other estate matters. Further, it is not all about the paper work. Even when using a paralegal who is helpful and valuable for the paperwork, to argue a motion in court on your own without an attorney is quite difficult to do. The Judge may be patient with a pro se litigant but that does not mean a Judge will rule in the pro se litigant”s favor.

So, from the start, even with relatively small estates, there may be aspects of the administration process that can cause delays and frustrations. Sometimes people would rather give this burden to something with more knowledge about how to handle the matter rather than suffering the annoyances themselves.

Feel free to connect with me on LinkedIn or contact me to discuss further issues. DBosco@boscolegal.com; or (212) 201-1908

AVOIDING PROBATE WHEN TRANSFERRING REAL PROPERTY

When someone dies owning real property, a transfer occurs upon the death of the decedent, sometimes immediate upon operation of law (without the need for an estate proceeding); or sometimes through the estate administration process. It depends on the ownership of the property. The personal representative of the estate has to review the deed to determine who owns the property and in what form. Depending on the type of ownership, you may be able to avoid probate of the real property.

Generally forms of Ownership

Various ways to own real property include:

– sole owner (i.e., own it alone),

– joint owners with rights of survivorship (i.e., own it with another person and either party inherits the other party’s share),

– tenants in common (i.e, own it with another person but the heirs of each party inherits their own share), or

– tenancy by the entirety (i.e., own it as a married couple passing it to the surviving spouse).

Other ways to own real estate are through an entity such as a corporation, LLC or partnership (ex: a commercial building), or through a trust.

Avoiding Probate

The most common way to avoid probate is when spouses owning the property as tenants by the entirety. By owning the property together, the real property passes to the surviving spouse outside of the probate process, avoiding delays and hassle. Another way to avoid probate is for two individuals to own the real property jointly with rights of survivorship. When one owner dies, the other owner inherits. You must be careful that this meets your wishes because you may not want the other owner to inherit your share of the property when considering the total value of your estate.

A revocable trust is another way to own real property that allows for the avoidance of probate. The benefit of the trust holding title to the real estate is that you can have the trust document specifically address who will inherit the property without having the need to probate the property. One hurdle you will have to address is when the property has a mortgage. If so, you must review the mortgage agreement and in most cases get pre-approval of the transfer of property to the trust. Generally, mortgage companies permit the transfer to a revocable trust. Also, you must make sure you file forms and pay fees to your local governmental entity to effectuate the transfer and record the new deed.

There is a tradeoff for creating a revocable trust for the transfer of real property. There are legal costs, but ultimately, the legal cost to use this estate planning technique is less than the cost of probate. Hence the reason why people want to use a revocable trust, not only because of cut in costs, but sometimes to keep things private. Probate is public and the use of the trust can sometimes be more private.

Using ownership techniques to limit liability

Some owners of real property want to avoid personal liability, especially if the property is commercial property or a rental property. These owners typically create a corporation or a limited liability company to own the real property. At the time of death, these shares or membership interest pass through the individual’s estate through the probate process (or again, with advance planning techniques, you may be able to hold the shares in a trust). In the individual’s will or trust, you can designate who will inherit the share of the corporation.

Holding title as a sole owner or tenants in common without the use of a trust may have the property go through probate. Holding title to property in these way sometimes results in contention between the other owner of the real property and the persons who will inherent your share. It is best to discuss these issues with the other owner and the heirs to help alleviate any tension that may occur with new ownership of the real property.

Feel free to contact me for further discussion. dbosco@boscolegal.com (212) 201-1908