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Tuesday, October 12, 2010

How to cause a trainwreck

Today I had a conversation with a woman who is acting as a joint attorney, along with her brother, under their father's Enduring Power of Attorney. Things appear to be unravelling, as she and her brother are not able to agree on many of the decisions they have to make. The woman called me to confirm that the loophole she thought she'd found in the document was in fact going to allow her to just go ahead on her own when agreement was impossible.

The clause in question was one that is found in most Powers of Attorney of the enduring or continuing type. It says that two people are appointed as attorneys, but if one of them is not able or available to act as attorney, then the other one may carry on alone.

The woman who called me wondered whether "not available to act as attorney" meant that if her brother was sick, at work, busy with the kids or just didn't feel like taking care of attorney business that day, she could carry on without him on that particular day. Unfortunately, this is not what the clause means.

I ran into a similar issue a couple of years ago with a man who was trying to buy a house from an estate. His offer had not been accepted by the deceased's wife, who was acting as executor. However, the man told me, the deceased's son who was appointed as alternate executor was willing to accept the offer. The question was whether he could deal with the alternate executor instead. The answer was "of course not".

I know it's human nature to try to get your own way, but twisting the words of someone who left clear instructions is not going to work. Saying that the brother and sister must work together as attorneys doesn't mean that if one is busy the other can make unilateral decisions. Saying that a wife is in charge of the estate doesn't mean that if you don't get the answer you want you can ask someone else for a different one.

In both of these cases, the people making the documents left a back-up plan in place in case the first plan didn't work out. The person making the joint Enduring Power of Attorney wanted both of his children to work together, but left the option that one could work alone if the other had passed away, was seriously ill or had moved out of the country. The person making the Will wanted his wife to be his executor, but his back-up plan was that if his wife died first or had lost mental capacity, his son would be his executor.

When an attorney or an executor is "unable or unavailable" to take on the job, it refers to a permanent situation. It means the first choice person has died or turned down the job. A joint arrangement can't be joint one day, then unilateral one day, then back to joint. An executor is either in or out; you can't deal with the wife one day and the son the next. The potential for chaotic administration, acrimony and taking the fall for something another person did without your concurrence, is huge. Accountability and liability are compromised.

What did please me about both of these clients is that they called a lawyer and asked before taking any steps. They each probably avoided a trainwreck by finding out the facts before going ahead.

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