Cautionary Holiday Tales

​Holiday greetings, everyone!  I hope you've all worked off the tryptophan - or whatever afflicts you from eating too much tofurkey.  I always swear I'm going to nibble modestly, but then I feel guilty if I don't take at least a spoonful of all those family specialties.  And pretty soon I've got enough to stuff a hungry Teamster.  Then there are all those leftovers that seem even better the next time around.  Phew.


If you recall, the last time we chatted I offered some options for how to make this a true season of giving.  The trouble is, for all the givers, there are also takers, and it's those I want to warn against this time.

It may seem an odd place to start, but let's talk about durable powers of attorney, some of the most fundamental documents of modern estate planning.  As you know, they designate a trustworthy agent(s) who can make legal and financial decisions for us if we can't or simply don't want to take on those tasks ourselves.  And they're critical to get in place while we're able to do so, because after that point the only alternative agent is a court-appointed guardian who's chosen in one of the nastiest proceedings known to the law.

Getting back to the trouble I mentioned, the key to a successful DPOA is making the right choice of an agent.  Some just don't have the time to take on someone else's affairs, while others may be lovely people but just don't have the right skills to make competent choices.  But those are just the first hurdles to navigate, because then there are those takers.

Though certainly not commonplace, the takers are the agents who are looking out for their own interests and don't know the meaning of the term "fiduciary".  So, unbeknownst to those of us who trusted them, when they're a little short of funds to pay their property taxes, or need to catch up on their mortgage payments, or to replace a vehicle that's no longer reliable, they rationalize that we'd surely approve a short-term loan for those kinds of worthy purposes.  Then, maybe there's another need a few months later, and they swear to themselves that they'll replenish our coffers when a tax refund arrives.  But, oh, there's a different crisis at that point and before they know it, repayment is a distant and unfulfilled memory.  

Lest you think I'm overstating the problem, I could tell you about several situations where the unauthorized "borrowing" got into six figures and had to be reported to the State's elder abuse office for reparations or prosecution.  What's worse is that those folks weren't just unrelated people who shouldn't have been trusted in the first place.  They were children or nieces/nephews of their victims - yes, that's the right word - and the unauthorized withdrawals I'm referring to seriously jeopardized the care of their trusting elders. 

Then there was the case I suspect was the mother of them all.  I prepared a trust for an elderly client who wanted to make significant distributions to the client's favorite non-profits.  There was still going to be plenty left for family members, but the family holder of the client's DPOA apparently thought those distributions were exorbitant and that the client surely didn't mean to add that many zeros.  So, instead of checking with me to clarify the client's wishes - I had represented the client for more than 10 years - I believe the agent took that concern to another attorney - who knew nothing of the client's real wishes - and the agent misused the DPOA's authority to eliminate those distributions entirely.  There's no longer any way to verify my suspicions, but if accurate, we'd be talking about felony-level taking.

Needless to say, effective due diligence might have reduced the foregoing risks.  That is, a prospective agent who's had financial difficulties of his/her own, or who has a troubled domestic relationship, or who has a lingering substance abuse issue, may not be a reliable candidate to take on our affairs.  And if we're worried at the outset, that's not a comfortable place to be when we may no longer be able to monitor what happens next.  One possible safeguard if we have concerns may be to require the agent to report monthly to us or to another trusted family member concerning the use of our funds and the other decisions they've made.  At least those steps may achieve a measure of deterrence in the face of temptation.  Or we might simply say in the DPOA itself that no transfers of funds may be made to or for the personal benefit of our agent, or that no changes may be made in any of our documents that deal with the disposition of our assets.

I wish I could offer a happy ending to these tales - like Scrooge after his late-night visitations - but we'll have to take consolation from knowing ahead of time what can happen, without having to be victims ourselves.  So, let's all just make early resolutions for the upcoming holidays - and for the new year - to be the best givers we can and then to choose the right agents for when we'll surely need them.   After all, it's always better to give than to receive, right?