Death and Taxes - The Blog

Kirby Puckett, Powers of Attorney and Gifting

I previously blogged about litigation in the estate of Buddha-bellied Hall of Famer Kirby Puckett here.  According to this article, Mr. Puckett's ex-wife (Tonya Puckett) is now attempting to have the executor of Mr. Puckett's estate, Brian Woods, removed from his post.  Ms. Puckett claims that Mr. Woods "is no longer qualified to manage the estate because he has a 'significant and irreconcilable conflict of interest' stemming from his role in the money transfer and statements he made about taking care of Puckett's fiancee, Jodi Olson."

She alleged that Woods told her in the hours before Kirby Puckett died that Olson was not named in the will and that she needed to "be taken care of, and that $1 million to $1.5 million needed to be given to her."

...

The petition also alleges that on the day Puckett died, his longtime agent, Ron Shapiro, acting under a power of attorney, transferred money from Puckett's account to Olson's.

The petition said the "gift" was "a clear violation" of Arizona law. Woods "was effectively an accomplice," it said, because he was aware of the transfer and did nothing to stop it or, later, recover the money.

[Mrs. Puckett's attorney] said Tuesday that the transfer was made even though William Brody, a Minneapolis attorney representing Woods, advised Shapiro before the transfer that such a transaction was not authorized by the power of attorney agreement.

The question of whether an agent under a power of attorney can make gifts on behalf of the principal -- either directly or by changing the principal's estate plan -- has always been an important one. 

In Illinois, the statutory form for a power of attorney for property includes a long list of powers granted to the agent, but doesn't include the power to make gifts.  I typically include such a power if my client wants it. 

The above article mentions Arizona law -- I assume that Mr. Puckett executed an Arizona power of attorney for property.  However, it doesn't appear to me that Arizona has a statutory form for this document, so the question of whether the gift was a "clear violation" of Arizona law depends on the specific language of the power of attorney Mr. Puckett executed.   

Powers of Attorney and Surgery

Thanks to the magic of Vicodin, I seem to be recovering fine from yesterday's surgery -- thanks to everyone who wished me well.  With any luck, my "hyena" should be better in no time.

This was the first opportunity I've had to submit the health care power of attorney I drafted for myself a couple of years ago.  I mentioned this fact to my nurse, and she told me, "Gosh, I really need to get one of those."  Talk about the cobbler having no shoes! 

A New (Not Recommended) Alternative To POAs

The title of the article (courtesy of Sploid) says it all:

"Granny Gets DNR tattoo on her chest"

I agree with Bob Cowie, chairman of the Iowa Bar Association's probate and trust law section, who is quoted as saying that "[t]here are easier ways to do it than that," such as signing a living will or authorizing a medical power of attorney.

Estate of Doyle: Powers of Attorney, Revocation, and Guardianship

This month's Illinois Bar Journal has an interesting discussion of the recent 4th district case entitled In re Estate of Doyle (the discussion is available to members of the Illinois State Bar Association here).

The Doyle case involved a power of attorney for property executed by Mary Doyle in favor of her daughter, Rose Marie Doyle, in 1998.  Mrs. Doyle then tried to revoke the power of attorney.  In 2004, Mrs. Doyle's son and son-in-law sought a guardianship for Mrs. Doyle, which was eventually granted (apparently because the court found that Mrs. Doyle's daughter had abused her position as agent under the power of attorney).  The question before the court was this: was Mrs. Doyle's revocation of the power of attorney effective, even though Mrs. Doyle may have executed such revocation when she was incompetent?

The case generated three opinions:

The majority ignored the question of Mrs. Doyle's attempted revocation, finding instead that the court had "implicitly revoked" the power of attorney under a provision in the Power of Attorney Act (755 ILCS 45/2-10) allowing an agent to be removed for cause.

The concurring opinion agreed with that result, but said that an incompetent person can't revoke a power of attorney.

The dissent agreed that an incompetent person can't revoke a property power of attorney (noting that revocation of a health care power of attorney by an incompetent person is specifically allowed under the statute).  But the dissent went on to say that a power of attorney is not implicitly revoked through a guardianship proceeding -- instead, you have to specifically use the procedure set forth in §2-10.

The majority's opinion has evidently been somewhat controversial among practitioners, since it appears to weaken the effect of §2-10.

Powers of Attorney and Real Estate Closings

Q: Do I need to attend my real estate closing?

A: That depends on whether you are buying or selling the real estate.

If you are a seller, you don't need to attend if (1) you execute a power of attorney for property, and (2) your agent under that power is present at the closing and signs all of the sale documents (deed, bill of sale, etc.) on your behalf.  It's fairly common for married couples to use a power of attorney for this purpose, with one spouse attending the closing and signing documents for both spouses, and the other spouse dealing with the movers or watching the kids.  In addition, it's somewhat common for sellers (whether married or single) to avoid the closing altogether, by appointing their attorney as their agent. 

While powers of attorney work fine, I usually like to have sellers who don't plan to attend the closing sign all of the sale documents in advance.  That way, the sellers will be able to avoid having to record their power of attorney with the county recorder's office (saving a recording fee of perhaps $50).  The power of attorney will still be necessary to sign ancillary documents at closing (such as the settlement statement), but shouldn't need to be recorded.

If you are a buyer, you will need to check with your lender, to see if you can (1) have the loan documents signed by an agent under a power of attorney or (2) sign the loan documents prior to closing.  If your lender says no to both of these requests, you'll have to attend the closing (or find another lender).

An Intro to Guardianships, and The Health Care Surrogate Act

This month's Illinois Bar Journal features an article by Helen W. Gunnarsson entitled "Help Your Client Choose the Right Advance Directive" (the link is here).  Much of the article covers issues I've already discussed here -- how powers of attorney for health care are more flexible than living wills, the importance of making your wishes known, and the danger of abuse by an unscrupulous agent.  But there are some helpful points in the "sidebars" at the end of the article, where Ms. Gunnarsson discusses advance directive resources as well as the Health Care Surrogate Act (the "Act").  The Act has been referred to as "the procrastinator's health care power of attorney," and allows health care decision making to take place without the need for a guardianship proceeding. 

Guardianship is to disabled people and minors what probate is to decedents -- the court is overseeing the administration of the property of someone who can't do it for himself or herself. (In addition, because the disabled person or minor is still alive and may be vulnerable, the court needs to concern itself with the disabled person or minor's care.)  But, while I've talked about how probate isn't all that time-consuming or expensive, the same isn't true for guardianship -- it's a royal pain in the neck.  Given this fact, it might be a good idea to review guardianship substitutes. 

I would first note that there are really two types of guardians:

(1) the guardian of the estate, who deals with the property of the disabled person (aka "the ward"); and

(2) the guardian of the person, who handles the ward's living arrangements, care, etc.

Substitutes for Guardian of the Estate

• If a person established and transferred his or her property to a living trust prior to disability and the trust document allows it (which it should), the trustee can administer the property for the person's benefit.  That includes making distributions to or for the benefit of the person.  (Usually the creator of a living trust will be the trustee of the trust when it's created, but the trust document should provide an easy mechanism for the trustee's removal in the case of the trustee's disability.)
• If a person executed a property power of attorney prior to disability, the agent can use it to manage the person's property for the person's benefit.  Setting up a living trust but failing to transfer property to it is a common estate planning error; as a result, I always include a provision in my property power of attorney documents allowing the agent to begin or finish the transfer of property to any living trust previously established by the person.

Substitutes for Guardian of the Person

• If a person executed a health care power of attorney prior to disability, the agent can make health care decisions for the person. 
• The Health Care Surrogate Act can be used if a person didn't execute a health care power of attorney prior to disability.  Of course, as with many other issues, the drafters of the Act make certain assumptions about who the person would have wanted to make health care decisions on his or her behalf -- these assumptions may not reflect the wishes of any particular individual.

Legal Documents and Burial Instructions

Question: When I die, I would like to be cremated.  Should this request be inserted into my Will, or into another legal document?

Answer: I wouldn't recommend putting burial instructions in a Will.  Many people keep their Will in a safety deposit box or safe, thereby making it difficult to obtain at a moment's notice.  I know from experience that there's nothing worse than looking for a decedent's (temporarily missing) Will, trying to find burial instructions because funeral arrangement must be made a.s.a.p.

I would recommend putting your burial instructions in your health care power of attorney.  While a power of attorney is mostly concerned with issues arising during your life -- you use it primarily to appoint an agent to make health care decisions for you if you are unable to do so -- the health care power of attorney statute specifically grants an agent certain powers after the principal's death:

The agent is authorized: to direct that an autopsy be made... ; to make a disposition of any part or all of the principal's body pursuant to the Illinois Anatomical Gift Act, as now or hereafter amended; and to direct the disposition of the principal's remains.

(That comes from 755 ILCS 45/4-10(b)(5)). The burial instructions are most appropriately inserted in paragraph 2 of the Illinois Statutory Short Form Power of Attorney.  So that your agent can carry out your wishes, you'll also want to make sure that you do not indicate a termination date (such as death) for the power of attorney.

Law Quadrangle Notes on Drafting Errors, Living Wills

The Winter 2005 Edition of Law Quadrangle Notes, put out by my alma mater (The University of Michigan Law School), recently arrived in my mailbox.  Usually the publication doesn't interest me very much, as it discusses law at a theoretical (rather than a practical) level.  But this time I found relevant articles by two of my favorite professors:

1. Professor Lawrence Waggoner has worked extensively on the Uniform Probate Code and a restatement of the law relating to Wills and other transfers.  The article contained in this pdf document talks about changing the way errors in Wills are handled.  Traditionally, judges have been very strict on the topic of errors in a Will -- if your attorney made a mistake, the courts would not act to correct it.  The result has been lots of invalidated Wills, lots of Wills that don't carry out the intent of their creator, and lots of malpractice suits against hapless attorneys.  Professor Waggoner and others now seem to be embracing a more pragmatic approach to errors, one that allows court "to excuse harmless execution errors and to reform mistaken terms in wills."  This strikes me as a win-win-win result: the intent of the Will's creator is honored, the creator's beneficiaries receive the property to which they are entitled, and the attorney avoids a malpractice suit.

2. I've written at length here about the limitations of living wills.  In this pdf document, Professor Carl Schneider and his co-author, Angela Fagerlin, examine living wills from a bioethics perspective, and their conclusion is even more harsh than mine:

"The living will has failed, and it is time to say so."

The two also argue (as I have) that powers of attorney can do what living wills have failed to do.

My Final Word on Advance Directives (for a while)

I've been thinking about (and blogging about and talking about) living wills and powers of attorney a lot over the past month or so, and I'm ready to take a break from the topic.  However, before I do so, I'd like to share this:

An Introduction to Advance Directives (pdf)

In it, I attempt to synthesize some of my previous posts about the subject of advance directives in one handy, printable document.

The Schiavo Case: The Aftermath

While Terri Schiavo didn't have a health care directive (power of attorney or living will), her situation has led some commentators to ponder the moral and practical value of such documents. 

In this Weekly Standard article, Eric Cohen approaches the following question:  "What do we owe those who are not dead or dying but profoundly disabled and permanently dependent?"  Here's part of his answer, as it pertains to health care directives:

"...[E]ven if such individuals made their desires clearly known while they were still competent, is it always right to follow their instructions--to be the executors of their living wills--even if it means being their willing executioners? For some, it is an article of faith that individuals should decide for themselves how to be cared for in such cases. And no doubt one response to the Schiavo case will be a renewed call for living wills and advance directives--as if the tragedy here were that Michael Schiavo did not have written proof of Terri's desires. But the real lesson of the Schiavo case is not that we all need living wills; it is that our dignity does not reside in our will alone, and that it is foolish to believe that the competent person I am now can establish, in advance, how I should be cared for if I become incapacitated and incompetent. "

Andrew Sullivan takes Mr. Cohen to task here.  I tend to agree with Mr. Sullivan, but I did find Mr. Cohen's opinion to be pretty thought-provoking (once I began to ignore his fairly obvious bias).  If we can get past the sloganeering ("murderer" vs. "religious freak"), and really have a public discussion about the morality of end-of-life decisions, that would be a very good thing (is it happening a bit in the Catholic church?).  My guest and I try to do this a bit in my first podcast, which should be posted sometime this week.