Powers of Attorney: Draft With Care and Use as Instructed

APRIL 7, 2003 VOLUME 10, NUMBER 40

Recently two different state courts addressed the exercise of authority made pursuant to a durable financial power of attorney. These cases illustrate why care should be taken both in drafting a power of attorney and in choosing an agent.

In Florida, after David R. James II died, four children from his first marriage tried to evict their father’s widow from the home the couple had shared. Mr. James’ children argued that they could evict Rosalie James because David James, III, using his father’s power of attorney, had taken title to the home during Mr. James’ life.

The Florida Fifth District Court of Appeal upheld the lower court ruling in Rosalie James’ favor. The Appellate Court based its decision in part on Rosalie James’ argument that her husband’s power of attorney did not authorize gifts in excess of $10,000 per child — an amount far less than the value of the home. Robert James v. Rosalie Kaye Bruno James, March 7, 2003.

Meanwhile in North Dakota, Rodger and Paul Marquardt also ended up in court after their mother, Laura Marquardt, died. Rodger claimed that all proceeds from an annuity his mother had purchased should belong to him since his mother named him as beneficiary. However, the agent his mother named under her power of attorney, First Western Bank & Trust, had changed the annuity beneficiary prior to Mrs. Marquardt’s death.

Rodger argued that his mother’s power of attorney did not authorize her agent to change the beneficiary. The trial court agreed with Rodger about the power of attorney and that his mother’s will made clear that the annuity was his. While brother Paul appealed the ruling, he did not challenge the lower court’s decision about the power of attorney. First Western bank & Trust v. First Lutheran Church Foundation, Supreme Court of North Dakota, February 19, 2003.

Elder Law Issues periodically reminds its readers that powers of attorney are important, powerful and potentially dangerous instruments. Since 1998 in Arizona, agents under powers of attorney have been prohibited from taking any step for the benefit of anyone except the person who executes the power of attorney (the principal) unless the power is expressly listed and separately initialed by the principal and a witness. Powers of Attorney must be witnessed and notarized; the witness must be able to say that the principal acted freely and not under duress.

Arizona’s law reflects a growing concern about abuses tied to powers of attorney. Selection of an agent and the choice of powers to grant that agent both require careful consideration.

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