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Thursday, June 15, 2017

Can a grandchild request an advance on inheritance from a living grandparent's executor or POA?

Here's a really interesting question from a reader. It deals with asking for an advance on an inheritance from an older relative, and who might be allowed to make that decision. Read on for the question and my comments.

"A grandchild is looking for a advance on the inheritance from their living (90 yr old) grandparent. Is this legal? I believe grandma's executor will be asked. And he may be the POA as well. Again is this legal?"

You ask a couple of times whether "this" is legal but you are not very specific about what "this" is. On the face of it, you seem to be asking whether it is legal for someone to ask their grandparent for an advance on their inheritance.

A grandchild is not normally mentioned directly in a will, though of course it happens sometimes. Does this grandchild know for sure that he or she is actually named in the will? I'm a bit uncomfortable that everyone is so familiar with the contents of Grandma's will while she is still alive, but I realize some people do tell their families what their wills say.

Of course it's legal for a person to ask for an advance, but the person must be careful not to cross the line into bullying. Making Grandma feel for any reason that she cannot refuse the request is elder financial abuse. That is bound to result in disharmony and disputes within the family. If Grandma is of sound mind, then by all means someone can ask her for financial assistance.

The other possibility is that you're asking whether it is legal for someone to agree to the request. It seems that the grandchild is planning to ask someone other than Grandma herself, which is interesting. Does she not have the mental capacity to deal with the request?

You  mentioned that the executor will be asked to make an advance. That would be completely illegal and would, in fact, be theft. The executor has absolutely no legal authority to touch Grandma's money while Grandma is alive. Read the will. Read ANY will. It says, "when I die, this person will be my executor". It does not make them the executor while she's alive.

This is a bit of a pet peeve for me. How many times have I told someone who will be an executor in the future that they cannot act as the executor now, only to have them snap at me that they have the right to make financial decisions? No, they don't. It is illegal to take your parents' money without legal authority and a will gives you no authority whatsoever while the person is still alive. Hopefully I've made my point. The executor may NOT advance anything to the grandchild, and if he or she does, I hope the rest of the family steps in and puts a stop to it.

You also mention the Power of Attorney (POA), who is in a very different position from a would-be executor. The person acting under a POA does have legal access to Grandma's money, as long as the POA document has been properly brought into effect. Most POA documents require a doctor to provide a statement that the person has lost capacity before it can be used. I'm assuming that the contingency has been properly met in this case.

So, we've established that the POA can access Grandma's funds, but can  he or she give an advance on an inheritance? The first and foremost guideline for anyone acting under a POA is that he or she must always act in the best interest of the person he or she represents, in this case, Grandma. How does it benefit Grandma to advance funds to the grandchild? Is it the best thing for Grandma, or is it really only good for the grandchild? The POA must put Grandma's best interest ahead of anyone else's, even if the grandchild is a child or sibling of the person acting under the POA. That's a tough standard to meet.

I think in a case like this, the person acting under the POA would be justified in looking at the bigger picture to take into consideration how Grandma interacted with her grandchildren financially before she lost capacity. Has she made advances to other grandchildren? If so, that might indicate that she would choose, if she could, to make an advance now. Has this particular grandchild asked Grandma for money in the past? If so, it could indicate that the grandchild is taking unfair advantage of Grandma, and that she would refuse if she could. The family context is very important.

Of utmost importance is the question of whether Grandma can actually afford to part with the money for an advance. Her own care and accommodation must the first priority for the person acting under the POA document. If her financial picture is modest, it is really not fair to ask her to compromise her own future care to help a grandchild.

As an aside, I suggest that if the advance is made, it should be documented in writing to avoid any future issues.

I realize that you probably would have really liked to get a "yes or no" answer, but it's never that simple in estate law, I'm afraid.

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