‘She burned his papers’: My elderly neighbor named me as his power of attorney. Can his estranged daughter object?

‘She burned his papers’: My elderly neighbor named me as his power of attorney. Can his estranged daughter object?

Dear Quentin,

My neighbor is elderly and he was recently taken to the hospital.

He has a daughter who was listed as power of attorney and executor of his will; however, she burned his papers shortly after she signed the POA. He and his daughter had not seen each other or spoken to each other in at least three years.

He does not have any extra copies in his house and the attorney that prepared the POA documents is no longer practicing. My neighbor has elected to appoint me as his new POA to be able to handle his estate.

I signed a blank POA that was printed from an online form for the state of Pennsylvania, and prior to his signing it was determined that he was coherent and understood everything. It specifically says that he revokes all previous durable POA.

Can his daughter challenge this — and will I be responsible for handling his estate after he passes?

Trying to Figure Things Out

Dear Trying,

I’m betwixt, befuddled and bewildered as to why your neighbor’s attorney, even if he is no longer practicing law, does not have a copy of this POA document in his files. What’s more, if these POA responsibilities include real-estate decisions the papers should be filed in the land records office (or the office of the recorder of deeds in Pennsylvania).

That said, if you signed a new POA, and it meets the legal requirements, it will supersede any previous POA document, whether or not it was burned by his estranged daughter. She appears to not want any responsibility for her father’s affairs, but as you imply in your letter, that can always change after a person dies, especially when there is a lot of money involved.

There are blueprints you can download from the Internet and, while not ideal given the multiple and often unreliable sources on the web, I have some hope that it was executed properly given that it was done in the presence of your friend’s attorney. At the very least, it must also be signed by your neighbor (the “principal”), witnessed by two adults, and notarized.

Can his daughter challenge this POA? Yes. Could she succeed? It would involve a timely and costly legal action where she would have to prove that your neighbor lacked testamentary capacity, which would require doctors and mental-health professionals as witnesses to testify to his state of mind, that he signed under duress, or the POA was improperly executed.

If all of the above came to naught, it would still be possible to challenge your role as POA — in theory, at least — if she was able to prove that you abused your power, neglected your responsibilities, stole from your neighbor’s estate or simply mismanaged his assets due to incompetence. That, of course, would require a paper trail of pretty solid evidence.

In Pennsylvania, a POA is assumed to be “durable,” unless otherwise stated. That gives you (or whoever is named as the agent) the legal authority to act on behalf of the principal during their lifetime and/or if they become incapacitated; it lasts until the principal dies or if they decide to cancel it. Being an executor is a separate role that occurs after they die.

Requirements for a power of attorney

According to Timoney Knox Attorneys at Law in Fort Washington, Pa, POAs have three requirements: “Act in accordance with the principal’s reasonable expectations to the extent actually known by the agent, and otherwise in the principal’s best interests; act in good faith; and act only within the scope of authority granted in the power of attorney.”

You must, the firm adds, “act loyally for the principal’s benefit, act so as not to create a conflict of interest that impairs the agent’s ability to act impartially in the principal’s best interest, act with the care, competence and diligence ordinarily exercised by agents in similar circumstances, and keep a record of all receipts, disbursements and transactions.”

A copy of the POA has the same legality as an original, Timoney Knox adds. “We usually provide our clients with a couple of originals and a couple of copies of their powers of attorney [and we] always tell clients to use a copy if at all possible. This becomes especially important if the principal becomes incapacitated and cannot execute another power of attorney.”

As I said, an executor is a separate role that comes into play after your neighbor passes away. You would be responsible for initiating probate, administering and taking account of his assets and liabilities (from real estate to bank accounts), carrying out his wishes in accordance with his will, and distributing the assets to the named beneficiaries.

Before accepting, be aware that you are open to being held liable for any damages if you breach your fiduciary duty and responsibilities as executor. Anyone who sees fit to challenge your role as executor must have a “pecuniary interest” in the estate — that is, stand to inherit his assets. Such action, once again, would (or could) involve his daughter.

Given the financial and legal risks taken on by an executor, it’s not a job to be accepted without due consideration. The law in Pennsylvania suggests reasonable executor fees comprise 5% of the estate if it’s valued at less than $100,000, 4% of the estate if it’s between $100,000 and $200,000, or 3% if it’s valued at between $200,000 and $1 million, and so on.

It’s a noble thing to help your neighbor, but please proceed with care.

April is National Financial Literacy Month. To mark the occasion, MarketWatch will publish a series of “Financial Fitness” articles to help readers improve their fiscal health, and offer advice on how to save, invest and spend their money wisely. Read more here.

The Moneyist regrets he cannot reply to questions individually.

Previous columns by Quentin Fottrell:

I invested half of my son’s inheritance with a 13.5% return. A major broker underperformed the S&P with the rest. Should I take over all his assets?

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