May 17, 2013
In an apparent case of first impression, the Illinois Appellate Court concluded that executing a power of attorney does not necessarily impose fiduciary duties on the agent. Estate of Martin Stahling, Sr., 2013 IL App (4th) 120271. Stahling provides a fascinating case study of the interplay between the presumption of undue influence and powers of attorney. The decedent named his son as agent under a health care power. Eleven days later the decedent signed a deed conveying his farm to himself and his son as joint tenants. Title to the farm vested in the son when his father died soon thereafter. Decedent’s daughter sought to set aside the conveyance, arguing that the health care power created a fiduciary relationship between decedent his son and raised a corresponding presumption of undue influence.
The Appellate Court rejected the daughter’s argument, noting that the son never exercised any authority under the health care power of attorney. Indeed, he was unaware that decedent even executed the power. According to the Court, “an agent must accept the powers delegated by the principal” to create a fiduciary relationship. Id. at ¶ 22. The Court explained that a power of attorney, alone and without evidence of acceptance by the named agent, means nothing.
Even if the son knew of and accepted the power, the court would have reached the same result. The Court observed that “even when a health care power of attorney creates a fiduciary relationship … that relationship does not extend to matters outside the scope of the power of attorney. Moreover, a health care power of attorney, by itself, does not create a presumption of undue influence in property or financial transactions between the power’s principal and agent.” Id.at ¶ 23.
The Court’s decision reminds us of the corollary proposition that a power of attorney for property, if accepted by the agent, will create a fiduciary duty that extends to property transfers, will and trusts. In other words, the decision highlights the importance of a proper planning and execution of estate planning documents to avoid the presumption of undue influence and costly-and often bitter-will contests.
Please consult the estate planning attorneys at Goldenberg Heller & Antognoli, P.C. if you have questions about powers of attorney or any other estate planning matters.