A Power of Attorney is an incredibly important and, powerful, document that should be carefully considered when any person seeks to put this helpful and, in our current world, necessary document in place. This was made very clear once again in a decision by a Virginia Circuit Court in Madison where the Court once again upheld that the terms of a Power of Attorney over the competing claims by an estate’s beneficiary. Phillips v. Rohrbaugh, et al., Record No. 200840 (Kelsey) Oct. 21, 2021.
In 2004, a father executed a power of attorney that stated “it is my intention that, except as specifically provided for herein, my agent shall never be required to make disclosure or inspection of my affairs, or their actions as my agent, either under this instrument or otherwise, to any third party.”
Upon the power of attorney becoming effective, the son managed the financial affairs and acted as father’s agent until his death. Upon his death, son became Executor of father’s estate. When the father passed, his daughter sought information about a gift transfer that son had made as the agent. Even though the son was not required to do so under the terms of the power of attorney executed by his father, the son provided some information to the daughter. The daughter was not satisfited with the information provided and instead sued the son.
In her law suit, the daughter claimed two things.
First, she claimed she was entitled to the information due to the principal of equitable accounting. Generally, in Virginia this means that daughter believed she was entitled to the information because of her role as a beneficiary and her brother’s role as the Executor of the estate. In this instance, she believed that she fell under the narrow exception to estate rules that if the executor of the estate is engaging in fraud or insolvency, she could become a defacto representative of the estate in order to get an inside look into the estate.
Unfortunately for the daughter, as there was no evidence that pointed to son engaging in fraud or insolvency she could not claim fraud or insolvency in her suit. Accordingly, the Circuit Court ruled that because there were no special circumstances to warrant the accounting of the estate, daughter was not subject to becoming a defacto representative of the estate.
Second, daughter claimed that according to the Virginia Power of Attorney Act, she is entitled to petition the court to review the agent’s conduct and grant appropriate relief. The Virginia Power of Attorney Act makes it clear that the courts “should respect the personal financial privacy of competent principals.” Because there was no evidence that showed that their father was incapacitated or taken advantage of at the time of execution of the Power of Attorney, the Court held that it must defer to the language of the document. The father’s power of attorney clearly stated that father did not want this section of the Power of Attorney Act applicable to his estate and that his agent (his Son) was to be of sole knowledge of his affairs.
In the end, it was the provision in the father’s power of attorney stopped the daughter from digging further into the transfer.
If you are considering putting a power of attorney in place or have questions about your current power of attorney and want to understand the implications of its provisions, our estate attorneys can help. You are welcome to email us at info@wmmlegal.com or call us at (804) 423.1382 to set up an initial consultation.
See https://valawyersweekly.com/2021/11/01/021-6-069-phillips-v-rohrbaugh-et-al/
