For most individuals, a durable general power of attorney is a protective device, intended to avoid the need for a guardianship or conservatorship in the event of a disability. Two questions often arise, however: how broad may an agent’s powers be and can these powers be used to change a principal’s estate plan? The Virginia Supreme Court recently made clear that the answers to these questions would turn on the language of the instrument, against the backdrop of the principal’s circumstances, and Virginia’s Uniform Power of Attorney Act.
In this case, a wife who had no children died disinheriting her husband’s adult children. The wife’s act of disinheriting her husband’s children contravened the spouses’ understanding that both the wife’s relatives and the husband’s children would receive a share of their estates. When the wife died disinheriting her husband’s children, the husband no longer had capacity to change his estate plan. His daughter, as agent under his power of attorney, created “two new trusts,” naming herself and her brother remainder beneficiaries to the exclusion of the wife’s relatives. The wife’s relatives sued, insisting that they had to be included as beneficiaries. The trial court disagreed, validating the daughter’s act of creating two new trusts as agent under her father’s power of attorney.
On appeal, the Virginia Supreme Court also upheld the use of the daughter’s power of attorney to exclude the wife’s relatives. The Court found that the agent’s actions fell within the express terms of the power of attorney. On a companion point, the Court noted that language in the power of attorney also allowed a beneficiary change to be made to a retirement account. The Court held that although the power of attorney did “not track the language” set out in Virginia’s Uniform Power of Attorney Act, the agent’s powers over the retirement accounts, coupled with a broad grant of general powers conferred upon the agent, sufficed to permit the beneficiary change made by the daughter.
The case is Reineck v. Lemen (Nov. 23, 2016).