More Than a Form: Analyzing the Power of Attorney
A recent case from the Circuit Court of Wythe County Virginia provided a good a reminder of why a well-drafted power of attorney is a critical part of every person’s estate and disability planning. The case of Rae Lee Davis v. J. Garnett Davis Jr., et al analyzed the propriety of an agent’s transfer of property prior to the death of the principal.
The case arose from questions raised by the wife of a decedent regarding transfers which were discovered after the death of the principal. Samuel Dickey Davis (“Dickey”) was injured in an accident while he was in his 40s. The accident left him a quadriplegic who required assistance with daily functions such as dressing and bathing. Dickey’s mother, Agnes, added an addition to her home and made arrangements to provide care for Dickey in her home. Agnes was Dickey’s primary caretaker and Dickey’s sister Susan, and a family employee, Rae, also assisted in providing care for Dickey. Shortly after the accident, on September 23, 1993, Dickey executed a power of attorney naming Agnes as his agent. The power of attorney gave Agnes the ability to “sell and convey any and all personal property and real property” and “to execute and perform all and every acts, thing or things in law needful and necessary to be done in and about [Dickey’s] affairs, as fully, largely and amply, and to all intents and purposes whatsoever as [Dickey] might or could do if acting personally.”
In 2010 Rae moved into Dickey’s home and became his full-time care provider, replacing Agnes as the primary caregiver. In 2013 Dickey became ill and subsequently moved into a nursing facility in Tennessee. While Dickey was not able to return to his home, he was competent and able to make decisions for himself. Rae continued to be a supportive caregiver and, on October 1, 2013, Dickey and Rae were married. Later in October Dickey’s condition worsened, and he briefly went into cardiac arrest on October 25, 2013. On October 31, 2013, using the power of attorney executed in 1993, Agnes transferred three parcels of real property to Dickey’s sister and brother and the majority of his remaining property to herself. The total value of the property transfers was approximately $2 million. Dickey died on November 15, 2013.
In 2016 the Executor of Dickey’s estate (presumably after questions were raised by the beneficiaries of Dickey’s estate, including his wife and a charitable organization) requested aid and direction be provided by the court as to the propriety of the transfers made by Agnes prior to Dickey’s death. The lower court approved the transfers; however, on appeal the court decision was overturned and the appellate court found that the transfers were invalid.
The power of attorney document did not specifically include provisions authorizing gifts; therefore, the court carefully examined the term “sell and convey” contained within the document. In its analysis, the court determined that the term “convey” standing alone would authorize gifting; however the term “sell and convey” indicated that consideration (money) should be exchanged for a conveyance. Therefore, based on a careful analysis of the terms, the court found that Agnes did not have authority to make transfers to Dickey’s siblings. In addition, the court confirmed that, absent language specifically authorizing gifts be made to the agent, transfers made by an agent from a principal’s property to or for the benefit of the agent are presumptively fraudulent. Therefore, the transfers Agnes made to herself were considered fraudulent transfers.
When reading the facts of the case, particularly due to the value of the property in question, it is easy to conclude that no gifts should have been made from Dickey’s assets. However, there are many times in which transfers should be specifically authorized. For example it is common for husband and wife to use income belonging to one party or another (social security, pensions, paychecks, etc) to pay bills which may belong to one party or another. Absent specific provisions in a power of attorney, this practice would be presumptively fraudulent.
It is not often that actions undertaken by the agent under a power of attorney are analyzed by a court. However, this case serves as an important reminder that actions by an agent can be reviewed and be found fraudulent. When creating an estate plan, it is critical to consider current and future needs and, should certain actions be potentially necessary, then the language included in the power of attorney must be specific. In addition, should an agent wish to take certain actions on behalf of the principal, they should seek guidance to be assured that they are not taking action which would violate any civil laws. For these reasons, it is critical to have a professional prepare legal documents. Power of attorney documents are not simply forms and should not be treated as such, as we are reminded by this case.
Ask Kit Kat: Grandma Orcas
Hook Law Center: Kit Kat, what can you tell us about how grandma orcas help raise their grand-whales?
Kit Kat: Well, this is an interesting phenomenon. Among mammals, whales and humans seem to be unique in their ability to parent their children’s offspring despite having gone through menopause. Scientists point to Shachi (J19 is her formal name) who is an orca or killer whale estimated to be about 40 years old. She lives in the Salish Sea off Seattle and Vancouver. Now in menopause, she has been seen helping her daughter Eclipse raise her son Nova. Scientists say Eclipse, who is now around 14, gave birth to Nova at age 10—the youngest female orca known to have offspring. Even more remarkable, Eclipse gave birth during a period of low numbers of Chinook salmon, the staple of the Orca diet. Michael Weiss, a behavioral ecologist from the University of Exeter (UK), comments, “Most of the calves that were born in that period did not survive. But (Nova), the son of this small, inexperienced mother, is still growing, looking healthy, and is one of the most active, social members of the pod.” What made the difference? Weiss says it was the attention Grandma Shachi gave him. She stuck by his side while mom Eclipse was off foraging. He says, she “seems to have really taken on a major caregiving role.”
Grandma Shachi is not a one-time phenomenon. Researchers from University of Exeter (UK) and University of York (UK) used more than 40 years of observational data to construct statistics about births, deaths, and family relationships of orcas. What they found (which was published in the Proceedings of the National Academy of Sciences) is that there is a “grandmother effect” among whales. The grandmother effect is so powerful, that it affects the life span of her grand-offspring, even after it has become an adult. With a potential life span which can range up into the 90s, grandma orcas have lots of time to influence and guide their grand-offspring. Granny, an orca known as J2, was one such example. Her estimated age at the time she disappeared from her pod was over 90 years old.
The UK study is the first to record the grandmother effect in a nonhuman menopausal species. Grandmas are extremely valuable to this species, but as a group, orcas are still endangered due to the reduction of numbers of Chinook salmon, their dietary staple. According to the Environmental Protection Agency, the causes of the decline of the Chinook are dams, agricultural runoff, and overfishing. Daniel Franks, a biologist and one of the researchers from the University of York in the study, says “When the salmon are not doing well, the killer whales do not do well, and there is very little time left to take action.” (Jason Bittel, “Grandmother orcas help their grand-whales survive,” The Washington Post, (Science section), Dec. 9, 2019)