Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, September 18, 1995 TAG: 9509180116
SECTION: MONEY PAGE: 6 EDITION: METRO
SOURCE: MAG POFF
DATELINE: LENGTH: Long
Both my mother and her brother had previously appointed the same person to serve under their power of attorney. While my mother is in the nursing home, she continues to be responsible for all of the expenses related to her life estate in the farm such as the payment of taxes and insurance.
However, the individual designated under her power of attorney does not appear to be responding to her needs or attending to her affairs on her behalf. In addition, my cousins who have inherited the remainder interest in the farm are unwilling to assume any of the expenses for its maintenance until my mother's death.
I have contacted the person designated under my mother's power of attorney by letter inquiring as to why these matters are not being addressed. He wrote me back and indicated that there was no money left for him to pay these expenses.
Based upon my knowledge of my mother's and uncle's circumstances, it is my feeling that the money was not spent on their care. They incurred no expenses with the exception of the taxes and insurance expenses associated with the farm. The individual designated as the power of attorney has offered no explanation as to how my mother's funds were expended. My income is $7,068 a year, and my mother's income is less than mine, so we cannot afford to retain a lawyer.
Is there any way to force a person appointed as an attorney-in-fact under a power of attorney to show receipts or otherwise account for the funds entrusted to him? It appears unlikely that he could have spent $64,000 for the care of my mother or uncle within a 10-month period.
A: W. William Gust, an estate and tax lawyer with the Roanoke law firm of Gentry, Locke, Rakes & Moore, said that until recently there has been little legal recourse for a family member to review the activities of a person appointed under a power of attorney.
He said the sole remedy for addressing a suspected or proven abuse by an attorney-in-fact was the institution of a legal action in the Circuit Court to be brought by a guardian or committee in order to obtain an accounting of the financial activities of the attorney-in-fact and/or seek the termination of the authority of the attorney-in-fact.
This has been a very limited avenue for addressing potential abuses by a person appointed under a power of attorney, he said, because it was only available where a guardian or committee had been previously appointed.
In most instances, however, the use of a durable power of attorney is intended to avoid having to require the appointment of such a guardian or committee or to resort to the courts for authority to handle the business affairs of another, he said.
In light of these shortcomings, Gust said, the Virginia General Assembly recently adopted legislation that became law July 1, designated as Section 37.1-132.1 of the Code of Virginia.
Gust said this provision now permits a person interested in the welfare of a principal, who is believed to be unable to attend to his or her affairs, to obtain information from a person designated under a power to attorney relative to their financial dealings.
This inquiry may be made in writing to the person designated under the power of attorney specifically identifying the information requested.
To the extent the person appointed under the power of attorney refuses to provide this information, an interested party may petition Circuit Court to compel the person appointed under the power of attorney to provide this information, Gust said.
Generally, he said, the scope of the information requested will be limited to actions taken by the person under the power of attorney within a two-year period immediately preceding the date the petition is filed with the court.
An additional change in the law, also effective July 1, now permits an interested person to petition the Circuit Court of the city or county where the principal lives and request the court to limit or terminate the authority of the attorney-in-fact if it finds that such termination or limitation is in the best interest of the principal or her estate.
For purposes of invoking the new procedure to challenge the activities of a person designated under a power of attorney, a party must be a "person interested in the welfare of a principal."
Gust said this class includes any members of the principal's family or people who may be designated as co-attorneys-in-fact or as an alternate attorney-in-fact under the power of attorney.
The family members entitled to assert a claim under this statute include an adult parent, brother, sister, child or other lineal descendant, spouse of a child of the principal, spouse or surviving spouse of the principal.
In your case as the child of a person who has appointed a third party under a power of attorney, Gust said, you would have the right to make formal request for an explanation of how your mother's funds were handled within the two-year period immediately prior to your request.
Rather than filing an action immediately in Circuit Court, Gust suggested, you may first wish to communicate with the person designated under the power of attorney for your mother and explain specifically what you are requesting. You should advise that you are making your request within the scope of this new statute.
To the extent that the request does not bring an adequate response in a reasonable period of time, Gust said, you may wish to ask a lawyer for help in making a formal request for this information through Circuit Court.
by CNB