Putting a Power of Attorney for Healthcare and a Power of Attorney for Property in place as part of your Estate Planning preparation, no matter how simple you feel that your Estate needs may be, is an essential piece of your planning. Many attorneys encourage you to use the statutory Illinois Short Form Powers of Attorney (POAs), which in most cases are sufficient. But whether you are creating POAs for use with your own Estate plan or you are asked to become an Agent under POAs for a parent or another person, learn about them and take your role seriously.
A recent decision from the First District Illinois Appellate Court highlights the importance of understanding the POA Agent’s role and the need for attention by both the Agent and the Principal for whom the POA is created. The case of In re Estate of Jackson, 2022 IL App (1st) 211132, brings into focus the need for record-keeping, the need for understanding the POA Agent’s role, and the importance of the selection of your POA Agent.
In this case, Ms. Jackson appointed her friend Mr. Thomas to handle her financial, medical, and real estate affairs, and other personal and business affairs. She had POAs prepared, she signed them, and ultimately Mr. Thomas was granted access to Ms. Jackson’s brokerage account statements and to other important aspects of Ms. Jackson’s financial information and health records.
Fast forward several years when Ms. Jackson was found to be incapable of handling her own financial and personal decisions. Her Sister was appointed as guardian, and Mr. Thomas resigned and revoked his POAs. The probate court ordered Mr. Thomas to provide an accounting of Ms. Jackson’s assets for a four-year period. Money had earlier been disbursed from the brokerage account for which Mr. Thomas could not account. Those funds may have been disbursed by Ms. Jackson when she was competent, or they may have been improperly taken by others. Mr. Thomas, the Agent, could not explain.
It would be interesting to learn what actually happened. But the importance of this case for our clients is not what happened to the money. It is what the Court insisted was Mr. Thomas’s responsibility as Ms. Jackson’s POA Agent in the face of his inability to explain where the funds went and for what purpose. The Court explained that Mr. Thomas had a duty as a fiduciary to explain disbursements and distributions made. A POA creates a fiduciary duty as a matter of law. Such a role requires the agent to keep records and to provide a copy of these records when requested. The transactions may indeed have been innocent, but the award to Ms. Jackson’s guardianship estate, requiring Mr. Thomas to replace the funds when he could not explain where they went, was surely a surprise to Mr. Thomas.
The takeaway? If you are creating new or revised Estate Planning Materials, reach out for proper preparation of all of your Estate Documents and understand how they are intended to work for you and protect you. Legal Zoom or other on-line document preparation tools may look appealing because they offer to provide a simple and inexpensive legal document. But there is no substitute for the time and meaningful explanation that a seasoned attorney can provide to you during the Estate Planning process.
If you are being asked to take on the role of Agent under Powers of Attorney for another person, no matter how close your relationship may be with that other person, do not simply accept the Agency appointment without knowing all of the responsibilities to be expected of you. Do we think that Mr. Thomas wished he had paid for an hour of an attorney’s time to save him from the need to come up with BIG bucks later? You bet! You should have your own guidance, so that you can be prepared for the situations that lie ahead.
If you would like assistance, reach out to schedule time with one of the Attorneys at the Sherman Law Team.