A power of attorney grants legal authority to an agent to make decisions on behalf of the principal. A power of attorney is usually general in scope but of course can be limited in its application. It can be made effective immediately or upon one’s disability.
It is not uncommon for heirs to question the use of a power of attorney after the death of the principal, as there exists the opportunity for fraud and abuse of the power. An agent should ensure that when a power of attorney is used, that adequate records are kept in order to fend off potential suit by heirs. If foul play is suspected, an action may be brought against the agent seeking full disclosure of his or handling of the principal’s assets. Before doing so, one should consult with an attorney who is familiar with these types of actions to determine the viability of making such a claim.
Recent Cases:
Gift by Power of Attorney
Wolpin v. Wolpin, 2010 N.J. Super. Unpub. LEXIS 608 (Docket No.: A-1399-08T2) (App. Div. 2010). On appeal from the Superior Court of New Jersey, Chancery Division, Monmouth County. Before Judges Rodriguez, Reisner and Chambers.
In this matter, the court set aside a Deed transfer made by Decedent’s wife to herself by power of attorney. The court held that Decedent’s second wife lacked the requisite authority to convey the condominium to herself as the power of attorney did not contain any language authorizing a transfer of Decedent’s assets to herself. Under NJ common law in effect at the time, one holding a power of attorney could not give away the assets of a principal unless the power of attorney contained very clear language permitting such action. (Note: this was subsequently codified in N.J.S. 46:2B-8.13a).
This litigation is between Decedent’s second wife and the children of his first wife over the right to proceeds of sale of a condominium owned by the Decedent.
In 1984, Decedent purchased a condominium in Long Branch, New Jersey for $206,800. At the time, he was married to his second wife. At the time of purchase, Decedent gave his two sons a mortgage in the amount of $180,000 on the condominium. This did not represent any underlying debt owed to the sons. One son testified that Decedent wanted the mortgage to act as a gift to his children and grandchildren at his death. The mortgage was recorded and remained of record at Decedent’s death.
In 1987, Decedent prepared and executed a Deed granting the condominium to his sons together with use of a cabana, retaining a life estate for himself and providing that the conveyance did not merge with any mortgage. He gave the original Deed to his sons, telling them not to act on it unless he was terminally ill. The Deed was never recorded.
Thereafter, in 1988, Decedent executed a number of wills leaving the condominium to his second wife. He executed another will leaving her a life estate in the condominium, stating that the prior will was the product of undue influence exerted over him by his wife. He executed a third will leaving his wife the minimum required by law.
In 1994, as a result of a fall, Decedent gave his wife power of attorney. She immediately had a Deed prepared conveying the condominium to herself. Thereafter, Decedent executed a series of wills prepared by his wife’s attorney ratifying the Deed to his wife.
In 1995, Decedent wrote a letter stating that his wife was liquidating his assets and giving them to her daughter, but he needed her, and that any wills after 1995 were the product of undue influence. In 1997, Decedent conveyed the cabana to his wife.
In 2006, after Decedent’s death, his wife sold the condominium. She then learned of the recorded mortgage and commenced a declaratory judgment action seeking to invalidate the mortgage. Decedent’s sons counterclaimed, seeking to enforce the 1984 mortgage and 1987 deed.
The trial court found that the 1984 mortgage was a valid inter vivos gift, as donative intent was not in dispute, and Decedent recorded the mortgage himself.
The trial court also held that the 1987 deed was not a valid inter vivos gift as Decedent’s failure to record same was evidence of his lack of donative intent and evidence of his failure to relinquish dominion and control. Also, Decedent told his sons to hold the Deed until he became terminally ill.
The trial court upheld the 1994 Deed transfer. The appellate court reversed, as same was executed by Decedent’s second wife pursuant to a power of attorney. The power of attorney did not give her the right to convey the property to herself, and therefore should be set aside. The appellate court also found that the trial court’s reliance on subsequent wills which were likely the product of undue influence was misplaced, as no determination of there validity had ever been made.