Articles Posted in Power of Attorney

nycSurrogates Major issues that often arise in connection with estate settlement concern the identity and value of a decedent’s property.  In many estates, a decedent engages in estate planning and asset transfers during the months or even days before death.  Estate planning and/or transfers may occur for very legitimate reasons.  Concerns may arise as to tax planning which might include a need to take advantage of a change in tax laws or to account for a change in the value or nature of a decedent’s estate.

In other situations, a person may be experiencing a health or medical concern and desire to formulate a plan which can take advantage of requirements to receive Medicaid or other governmental benefits.  Another basis for a decedent’s planning activities may involve the need to alter beneficiaries or make changes to a Last Will or other documents due to the death or disability of a beneficiary or nominated Executor or Trustee.

As it turns out, many of these pre-death changes may adversely affect the interests to be received from an estate by a potential beneficiary.  A person who may be a possible recipient of a large financial benefit learns that shortly before death, a decedent made changes which drastically reduced his financial beneficial interests.  When this occurs, there is a high probability that estate litigation in the Surrogate’s Court will occur regarding these changes.  This is especially so where a decedent is elderly and experiencing poor health.

rendered-300x107Part of the estate planning process involves the creation and execution of advance directives.  These documents include a Power of Attorney, Living Will, Health Care Proxy and Living Trust.  One of the primary goals of these papers is for the creator to provide specific instructions for property management and personal care in the event he is unable to handle such matters due to incapacity or other circumstances.  In Article 81 Guardianship proceedings, the Guardianship Court will look to see if there are any advance directives in place.  If so, the Court may dispense with the appointment of a Guardian.  However, even where advance directives exist, Mental Hygiene Law Section 81.29 authorizes the Court to revoke advance directives if it finds wrongdoing such as undue influence.  The New York Probate Lawyer Blog has published many articles regarding advance directives.

One advance directive, a Power of Attorney, allows a person to make various property management decisions as an agent for the person who creates the documents.  These property matters are listed in the power and include the authority to handle real estate transactions, banking transactions, insurance transactions and business operating transactions.  The creator may choose which areas to grant authority and can modify the manner in which the authority is to be exercised.  There can be one agent or multiple agents who can act separately or together depending upon the written instructions.

As can be expected, the use of a power of attorney is sometimes abused and agents may take advantage of their power for their own benefit.  Courts tend to be very cautious regarding these matters and there tends to be a great deal of litigation in the Surrogate’s Court and the Guardianship Court concerning the proper exercise a power of attorney.

Many court cases and commentaries have focused on the use and problems associated with a Power of Attorney. In New York Article 5, title 15 of the General Obligations Law contains the statutes regarding a Power of Attorney (GOL Section 5-1501 seq.). The Power of Attorney can be a useful means by which a person can designate an agent to help with financial matters. A Power of Attorney should not be confused with a Health Care Proxy which is provided for by Public Health Law Section 2981. A Health Care Agent is limited to only health care decisions.

The issues that arise with agents or attorneys in fact who are named to make financial decisions is typically two-fold. First and foremost is that the agent may abuse his power over another’s finances and either act in manner that is not in the principal’s best interest or act in a manner to take advantage of the power for the agent’s self-interest. The second issue that often arises is that the agent fails to make or keep an accounting of his actions and transactions. As a result, financial decisions and payments that may be well founded can appear to be suspicious because accurate records and receipts of the amounts and purposes for the transactions are not available. Continue reading

A Power of Attorney in New York is provided by the statutory provisions in Title 15 of the General Obligations Law (GOL Sec. 5-1501 et. seq).   A Power of Attorney (“POA”) can be a very useful estate planning document during life by providing a means by which a person can delegate property management authority to an agent to be used in the event of disability or incapacity.   Section 15-1501A of the GOL provides that a POA is considered to be durable and that it is not revoked or terminated if the principal becomes incapacitated.

There are numerous cases where an agent has abused his authority under a POA.   Article 81 Guardianship proceedings often involve issues regarding the validity and proper use of a POA.  Similarly, these types of issues can arise during the course of estate settlement. After an executor or administrator is appointed for a decedent’s estate the fiduciary may discover that someone improperly utilized a POA during the decedent’s lifetime.   When this occurs estate litigation is commenced by the fiduciary to recover the decedent’s assets that were wrongfully taken or transferred by the use of the POA. Continue reading

A Power of Attorney is a document that can be both useful and misused. New York General Obligations Law (“GOL”) section 5-1501 and the sections of the law that follow set forth the basic provisions regarding the Power. Paragraph 2(j) of Section 5-1501 defines the Power of Attorney as “a written document . . . .by which a principal with capacity designates an agent to act on his or her behalf.

A New York Estate Lawyer is familiar with the use of the Power in estate and advanced planning. When the principal appoints an agent, the appointed party is given the various powers or authority that are specified in the Power. In the event the principal becomes incapacitated or unable to handle his property management functions the Power enables his agent to act on his behalf. The existence of a valid Power may obriate the need for an Article 81 Guardianship proceeding.

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Controversies arising in Estate Planning, Estate Litigation and Estate Settlement involve a vast variety of issues. New York Estate Lawyers know that the many different problems that are found in the area of Trusts and Estates are as diverse and complex as the individuals whose lives are impacted by them. In today’s blog post, I will take the opportunity to discuss some recent examples of controversies with the goal of providing some insight into the different issues and problems each portrays.

The New York Probate Lawyer Blog has discussed in prior posts that a New York Executor or Administrator has an obligation to discover and to collect the assets of a decedent. This “marshaling” of estate property is one of a fiduciary’s jobs when engaging in the settlement of an estate. An interesting approach was taken by one estate administrator who sued Wells Fargo Bank for wrongful death, elder abuse and other grounds for causing a decedent’s death. In an article by Matt Reynolds in AlterNet dated May 14, 2013, it was reported that Wells Fargo’s alleged improper foreclosure action resulted in the decedent’s death after he collapsed in the courtroom in an attempt to oppose the bank’s action. The estate Administrator then sued the bank claiming that it should pay damages for commencing a negligent and wrongful and malicious foreclosure action.

As can be seen from the Wells Fargo case, the assets or potential assets of a decedent are not always readily apparent. While it may be rather easy to discover and collect some estate property such as bank accounts, a fiduciary should investigate and consider all potential sources that might benefit the estate and its beneficiaries.

Another recent news story reported that a World War II veteran was attempting to prevent his daughter from evicting him from his home. As reported by Debra Cassens Weiss in the ABA Journal on May 16, 2013, the veteran had given his daughter a Power of Attorney whereupon the daughter transferred the vet’s house to herself and her husband. Despite claims of undue influence, the vet’s attempt to void the transfer was denied and now the daughter was seeking to evict him from the home.

The giving and use of a Power of Attorney should be carefully considered by both the Principal and the Agent or Attorney-in-Fact. While a Power of Attorney can be useful in estate planning and in avoiding Guardianship Proceedings, the person who is given the authority must be someone that can be trusted and relied upon without any doubt. Also, the person receiving the power has a fiduciary duty to act responsibly and any transfer of property by the Attorney-in-Fact to himself is considered improper.

Professional advice from a New York Estate Planning Lawyer can be very helpful in considering and preparing a New York Power of Attorney.

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A New York Fiduciary such as an Executor or Administrator is appointed by the Surrogate’s Court after a person has died. As discussed in many posts in the New York Probate Lawyer Blog, an Executor is appointed as an estate representative when a Last Will has been probated. The Executor is typically nominated or named in the Last Will. Sometimes the Court may need to appoint an estate representative who is not named in the Will. In such case, the title of the appointee is Administrator c.t.a.

An Administrator c.t.a. should not be confused with the typical appointment of an Administrator which occurs when a person dies intestate or without a Will. In these situations, the decedent’s distributees are entitled to be appointed in accordance with the statutory priority set forth in Surrogate’s Court Procedure Act (“SCPA”) Section 1001.

As talked about in prior posts, an estate fiduciary has many duties and obligations. At the core of a fiduciary’s responsibilities is to determine and collect the decedent’s assets, pay debts, expenses and taxes and distribute the net estate to the Estate Beneficiaries. In order to facilitate these functions an Executor and Administrator has many powers. Many of these powers are listed in New York Estates, Powers and Trusts Law (“EPTL”) Section 11-1.1 entitled “Fiduciaries: Powers, Duties and Limitations”. For example, this statute authorizes a fiduciary to invest estate assets, maintain insurance, collect rents, sell property and make repairs to property.

All fiduciaries accept the fact that they have a great deal of responsibility. Depending upon the size and complexity of an estate, acting as a fiduciary can be a very time consuming job. Many of the tasks that need to be performed can be facilitated by a New York Estate Lawyer. When representing a New York Fiduciary, I routinely help a client collect estate assets and determine debts and obligations that need to be paid. However, there is no substitution for actual involvement and hands-on functions in Estate Settlement by the personal representative. Such obligations may be particularly demanding when the fiduciary lives out of state or in a foreign country. Out-of-State fiduciaries cannot provide a substitute for the many of the jobs they must perform.

A fiduciary cannot delegate his authority to someone else. He cannot give a Power of Attorney to anyone to perform the jobs that he is required to do. Thus, if a closing for the sale of real estate is to occur, the fiduciary is the only person with the authority to sign the deed and other transfer papers. The Executor or Administrator must either attend the closing or arrange to have all the necessary papers signed prior to the closing date and delivered when the deed is transferred. The fiduciary must also sign the Contract of Sale.

The prohibition against a fiduciary delegating his authority was recently recognized by the Court in Garmon v. County of Rockland, a case decided by U.S. District Court Judge Andrew Carter on February 11, 2013 and reported in New York Law Journal on February 22, 2013. In Garmon, the decedent had been arrested and died in police custody. Thereafter, the decedent’s daughter was appointed by the Surrogate’s Court as the Administrator of his estate. The daughter then executed a Power of Attorney in favor of the decedent’s father who then started a lawsuit to recover for the wrongful death of the decedent. The Court, however, dismissed the father’s lawsuit finding that the father was not the Estate Administrator and, therefore, did not have the authority to act on behalf of the decedent’s estate. Moreover, the Court found that the Power of Attorney was ineffectual since the daughter, as Administrator, could not delegate her duties regarding Estate Administration.

I have represented many Estate Executors and Administrators and assisted them with performing the various tasks associated with their responsibilities as a fiduciary. While a New York Estate Attorney cannot act in the place and stead of his client, I try to facilitate and expedite the Estate Settlement process so that my clients can fulfill their jobs as efficiently as possible.

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Estate litigation occurs on a daily basis in Manhattan, Brooklyn, Nassau and other New York Surrogate’s Courts in counties across the state. The variety of the issues that are the subject of dispute often appear to be endless and usually present rather interesting problems. New York estate lawyers confront many complex issues and provide assistance to their clients in attempting to resolve these matters that can disrupt and delay estate settlement.

Estate court cases occur throughout the United States and it is helpful to review a few current controversies since the situations presented can easily relate to a New York decedent.

In one recent incident a Missouri attorney has been accused of murdering her father in a very unusual manner. As reported in an article by Martha Neil posted on October 2, 2012 in the ABA, the attorney apparently shot her father, but after he survived being shot, the attorney used a forged health care proxy to have life saving treatment for him discontinued.

Under Section 2981 of the New York Public Health Law a person can appoint a health care agent by preparing a Health Care Proxy. The statute, along with companion statutory provisions, contains many specific provisions regarding the process to create the proxy. For example, it must be “signed and dated by the adult in the presence of two adult witnesses who shall also sign the proxy.” PHL sec 2981 2(a).

It should be recognized that a Health Care Proxy relates to health care decisions. In New York an individual can also appoint an agent to make financial or property decisions. However, to do so a different document called a Power of Attorney must be prepared and executed in accordance with the statutory rules beginning at New York General Obligations Law section 5-1501.

New York estate planning lawyers typically discuss with clients the benefits of having a Health Care Proxy and Power of Attorney as part of their estate and financial planning papers. As can be seen from the case of the Missouri attorney and her father, it is also important to select as an agent a person that can be trusted and will act in the principal’s best interest.

A different set of circumstances was recently reported regarding a father who sued his daughter when she questioned his handling of her trust. As reported by Barbara Ross and Bill Hutchinson in an article in the New York Daily News on October 23, 2012 a Manhattan attorney sued his daughter for libel after she filed a request with the Manhattan Surrogate’s Court to have him provide an accounting of her trust.

New York estate and Surrogate’s Court laws provide that all fiduciaries, whether they are Executors, Administrators or Trustees, are obligated to provide an accounting of their activities. The Court can require a fiduciary to account and a beneficiary can request that the fiduciary be compelled to account. Surrogate’s Court accounting proceedings can be very complicated since the fiduciary may have had many financial transactions over many years and the advice of estate attorneys and also accountants is generally very helpful.

I have represented many clients in connection with fiduciary accounting proceedings including individuals who are preparing and filing accounting papers and beneficiaries who are reviewing the accountings. When an interested party disapproves of the actions of the fiduciary, the common procedure is to file objections to the accounting with the Court and the interested party may fully investigate all financial transactions and present the objections to the Court at a hearing.

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New York Estate Lawyers assist their clients with many types of estate planning documents such as Last Wills, Living Wills, Health Care Proxy’s, Living Trusts and Powers of Attorney.

All of these papers are generally created to work together so that a person’s estate plan and lifetime directives are clear and can be followed without complication or estate litigation. A New York Statutory power of attorney empowers the appointed attorney-in-fact to make decisions regarding various types of matters such as business or real estate matters. A power of attorney is a lifetime directive and the authority granted by the power ends at the time of a person’s death. However, decisions and actions made by the attorney-in-fact can have significant consequences after the death of the principal. For example, when an attorney-in-fact executes a deed transferring real estate, or transfers assets in various bank or brokerage accounts, during the lifetime of the principal, provisions that were made in Last Wills or Trusts may no longer be effective. This is because the assets that were meant to be transferred by such testamentary documents may not be owned by the testator in the manner anticipated when the estate plan was created.

Another potential problem is that the attorney-in-fact may use the power of attorney to amend or change some of the estate planning documents such as a Trust Agreement. This was the situation encountered by the Court in Perosi v. LiGreci, decided by the Appellate Division, Second Department on July 11, 2012. In Perosi, Mr. LiGreci had created, during his lifetime, an irrevocable trust and appointed his brother as trustee. LiGreci also created a power of attorney appointing his daughter as attorney-in-fact. Shortly before LiGreci died, his daughter used her authority under the power of attorney to amend the trust and designate the daughter’s son as the new trustee.

The Court ultimately found that the attorney-in-fact had the authority, in this instance, to amend the trust.

In view of the Perosi case, it is clear that naming a person as attorney-in-fact in a power of attorney requires serious consideration. Estate settlement and administration can be compromised by the actions of an attorney-in-fact who has the authority to change estate planning documents. It is a good idea to put precise language into trusts and other agreements defining to what extent, if any, an attorney-in-fact can amend or change these papers.

Individuals expend a great deal of time and expense in planning their estates through the use of Wills and Trusts. It is unfortunate where the actions of a lifetime attorney-in-fact can result in Surrogate’s Court litigation because these documents were changed without the testator or creator him or herself signing the amendatory papers.

A complete review by a qualified New York estate attorney is imperative so that a person’s intentions regarding estate distribution is set forth and can be implemented without modification or confusion.

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