SEPTEMBER 1, 1997 VOLUME 5, NUMBER 9
When Phoenix millionaire Benjamin Pouser died in 1993, he was 83 years old. In the months prior to his death, Pouser “was terminally ill and was suffering from the cumulative effects of numerous strokes, surgeries, illnesses, and debilitating conditions,” as an Arizona court later ruled. Pouser’s wife, Sue Pouser, had secured a durable power of attorney in December, 1992.
Ben Pouser was not unfamiliar with business matters. He was a law school graduate and a retired (and successful) businessman. His estate was substantial, and included stocks and bonds in his own name as well as some in joint tenancy with his wife. Nonetheless, by the time he signed the power of attorney he was reduced to making a “shaky mark” in place of his usual signature.
Although Ben and Sue Pouser were married for over thirty years, it had been a second marriage for him. He had three children from his first marriage, Amy, Harold and Richard. His Will, written in 1976, left the maximum amount permissible under tax law to Sue, but left the remainder in trust for his children.
Within two weeks of Ben Pouser’s power of attorney, his long-time physician signed a letter saying:
To Whom it May Concern: Benjamin B. Pouser is not capable of making major decisions. Yours Truly, Robert W. Hamilton, M.D.”
Armed with the power of attorney and Dr. Hamilton’s letter, Sue Pouser proceeded to transfer $800,000 of securities held in Ben Pouser’s own name into a joint tenancy account between the two. She also ordered the liquidation of those securities and the purchase of bonds in joint tenancy, despite the substantial income tax cost of that decision.
After Ben Pouser’s death, his children sued their stepmother seeking (among other things) a determination that Ben Pouser was incompetent when he marked the power of attorney, and that Sue Pouser had used the power of attorney to benefit herself. The trial court disagreed, and the case was appealed.
The Court of Appeals has now agreed (at least in part) with Ben Pouser’s children. Noting that “an agent who obtains advantage from a fiduciary relationship is presumed to have obtained that advantage fraudulently,” the appellate court has ordered a new trial and instructed that Sue Pouser must affirmatively show that she acted for Ben Pouser’s interest rather than her own.
The Court did not, however, agree with Ben Pouser’s children regarding his mental capacity to grant his wife the power of attorney in the first place. The judges noted that Ben Pouser’s attorney (who prepared the power of attorney), nurse and housekeeper all agreed that he was competent at the time he made his mark. Even Dr. Hamilton, who wrote that Ben Pouser was incompetent two weeks later, testified that he had done so as a favor to Sue Pouser, and that he did not really believe Ben Pouser to be incompetent.
At the next trial, Sue Pouser will be required to show by clear and convincing evidence that she did not take advantage of her husband using her power of attorney. She will also have to show that she did not abuse her position as Personal Representative (Executor) of her husband’s estate to benefit herself. She will not have to fact charges that she abused the marital relationship itself, however; the Court ruled that she will not have to answer allegations that she unduly influenced her husband to change his affairs to benefit her. Pouser v. Pouser, Arizona Court of Appeals, August 5, 1997.
Ed. note–over eighteen months after this article was prepared, the Arizona Supreme Court reversed the Court of Appeals. The Supreme Court first determined that Mr. Pouser’s will should be construed so as to leave his entire estate to his wife, disinheriting his children. Since the children would have received nothing even if the questioned transactions were reversed, the Supreme Court saw no reason to require Mrs. Pouser to account for her use of her husband’s money. Pouser v. Pouser, Arizona Supreme Court, April 9, 1999.