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.

Powers of attorney (“POAs”), perhaps the most valuable documents in your estate plan, are commonly overlooked or misunderstood.

POAs allow you, the “Principal”, to give someone, your “Attorney-in-Fact”, the legal ability to act on your behalf when you are unavailable (i.e., traveling) or unable to do so (i.e., ill or incapacitated). Your Attorney-in-Fact should be someone you trust to handle your affairs and respect your wishes.

POAs are often confused with wills but are different in that they only apply during your lifetime; whereas, a will applies when you die. Thus, POAs are like the lifetime counterpart to a will.

There are two kinds of POAs: (1) property and (2) healthcare. A property POA gives your Attorney-in-Fact the right to perform necessary tasks to manage your property, real and personal. A healthcare POA authorizes your Attorney-in-Fact to make decisions regarding hospitalization and long-term care when you are incapacitated.

One interesting aspect of the healthcare POA is that you can mandate a particular plan of care. For instance, you can authorize your Attorney-in-Fact to withhold all life-sustaining procedures, including nutrition and hydration, allowing you to die naturally, without delay. This can ensure your wishes will be respected and can give your family some peace of mind that they will not be left with the burden of making these difficult decisions.

In the absence of POAs, you risk having your affairs managed by a court-appointed guardian, or sending your family to court to obtain the authority to handle your affairs. This process can be time-consuming, slow and expensive, especially when compared to the minimal cost of havingPOAs drafted by an attorney. Think of the proverbial “ounce of prevention”.

Your estate plan should include tools not only for after your death, but also during your life. It is important to thoughtfully and responsibly prepare for the possibility of illness and incapacity and POAs are a simple, economical way to accomplish that.

Should you have a question or would like to discuss your estate plan, please contact Holly Marcum.