LEGAL BRIEFS

The legal brief addresses two main issues:

 The validity of the Power of Attorney

 Breach of civil and criminal laws by the administrator

i. Brief on the Validity of Power of Attorney in West Virginia

In West Virginia, the Uniform Power of Attorney Act states that one can

execute one form regarding decision-making about his/her property,
including his money, investments, taxes, trusts, and real estate. 

The power of attorney authorizes another person (the agent) to make

decisions concerning his/her property for himself/herself (the principal).The
agent will be able to make decisions and act with respect to the principal’s
property (including his/her money). The meaning of authority over subjects
listed on the power of attorney form is explained in the Uniform Power of
Attorney Act, §39B-1-101 et seq. of this code.

It must be noted that the power of attorney does not authorize the agent to
make health care decisions for the principal. However, one can make several
different types of power of attorneys in West Virginia such as:

 a financial power of attorney, which allows someone to handle

financial or business matters, and

 a medical power of attorney, which allows someone to make medical

decisions on the principal’s behalf.

In most estate plans, these powers of attorneys are what are known as
"durable" powers of attorneys, which means that they retain their
effectiveness even after one is incapacitated.

For a power of attorney to be valid in West Virginia, it must meet certain

requirements.
Mental Capacity for Creating a power of attorney

The person making a power of attorney must be of sound mind. The exact
contours of this mental capacity requirement are open to interpretation by
West Virginia courts.

Notarization Requirement

West Virginia requires you one to sign a power of attorney and get it
notarized (certified by a notary public).

Steps for Making a Financial Power of Attorney in West Virginia

1. Create the POA Using a Statutory Form, Software, or Attorney

West Virginia offers a statutory form (a form drafted by the state legislature)
with blanks that you can fill out to create a power of attorney.

In West Virginia, a power of attorney is durable (effective even after

incapacitation) unless it explicitly states that it terminates when one
becomes incapacitated.

2. Sign and Notarize the POA

As mentioned above, in West Virginia, one must have a power of attorney

notarized.

3. File a Copy with the Land Records Office

A copy of a power of attorney ought to be filed in the land records office in
the county where one owns real estate or expects to deal with real estate in
the future. In West Virginia, this office is part of the county clerk's office.

West Virginia Medical Power of Attorney

A medical power of attorney appoints a representative to make “health care
decisions relating to medical treatment, surgical treatment, nursing care,
medication, hospitalization, care and treatment in a nursing home or other
facility, and home health care.” The person one appoints can consent to
treatment, refuse treatment, or withdraw treatment on ones behalf. It is
important for this person to know ones wishes and the type of decisions one
would make about his/her health care, as well as the values he/she holds
that impact those types of decisions.

Unlike the provisions for a West Virginia power of attorney under

the Uniform Power of Attorney Act, the directives in a living will and a
medical power of attorney apply when you one is incapacitated.

The West Virginia Legislature adopted the Uniform Power of Attorney Act
(the “Act”).  The Act is a comprehensive overhaul of the state laws on powers
of attorney that will have wide reaching implications (including potential
liability) for the way financial institutions handle powers of attorney.

In this instance, Debbie obtained conservatorship in Georgia and not in west

Virginia. There is no evidence that the Georgia conservatorship is valid in
West Virginia. Debbie ought to have taken steps to ensure that the Georgia
conservatorship is valid in West Virginia, which she did not.

The conservatorship in Georgia did not meet the requirements of

conservatorships in West Virginia and therefore the conservatorship for
Georgia is invalid in West Virginia.

In this instance therefore the attorney in fact did not first get guardianship
or conservatorship to give the her the legal ability as an attorney in fact and
this invalidates all subsequent proceedings. The power of attorney therefore
did not comply with mandatory statutory requirements; it is therefore
invalid.

Other parameters to challenge a power of attorney

One can challenge the validity of a power of attorney on the basis of the
doctrines of mental incapacity or undue influence (or both). The first
principle in the field of inheritance law is to carry out a decedent’s intent.
Indeed, owners enjoy the virtually unfettered right to choose beneficiaries
and divide assets among them.
One way in which the law facilitates this freedom is by refusing to enforce
gifts, wills, trusts, and other devices that are not true expressions of the
decedent’s wishes. For example, a common ground for attacking an end-of-
life transfer is by alleging that the donor lacked mental capacity. The test for
capacity varies with the type of the conveyance. The easiest hurdle to clear
is “testamentary capacity,” which requires that someone who creates a will
or a revocable trust be able to grasp the bare rudiments of estate planning:
[A] testator [or settlor] must: (1) know the natural objects of her bounty; (2)
know her obligations to them; (3) know the character and value of her
estate; and (4) dispose of her estate according to her own fixed purpose.
Merely being an older person, possessing a failing memory, momentary
forgetfulness, weakness of mental powers or lack of strict coherence in
conversation does not render one incapable.

For example, in van Gorp v. Smith (In re Estate of Mann), Hazel Mann became
unable to care for herself and was placed under a conservatorship. She
exhibited several telltale signs of dementia: she “was unclean and smelled of
urine,” “did not seem to know how to order the right food from a store,” and
“described a toy doll as ‘me.’” As she was declining, she signed a will. A jury
nullified the document for mental incompetence.

Another oft-invoked basis for invalidating a wealth transfer is undue

influence. This rule “is one of the most bothersome concepts in all of law,”
because “[i]t cannot be precisely defined.” After all, any decision to leave
assets to someone else is “the result of influence.” But supposedly, influence
crosses the line and becomes “undue” when it overcomes the victim’s
autonomy so “his action[] is contrary to his true desire and free will.” The
test is highly subjective: It is only when the will of the person who becomes
a testator is coerced into doing that which he or she does not desire to do,
that it is undue influence. The coercion may of course be of different kinds,
it may be in the grossest form, such as actual confinement or violence, or a
person in the last days or hours of life may have become so weak and feeble,
that a very little pressure will be sufficient to bring about the desired result.
Undue influence claims are often litigated under a unique burden-shifting
regime. The challenger first tries to establish a presumption of undue
influence. For gifts and powers of attorneys, this presumption arises if there
is a confidential relationship between the parties and the arrangement
favors the dominant individual Instead, the contestant must also point to
one or more “suspicious circumstances.”

These red flags can include a testator who was ill or mentally diminished, a
beneficiary who actively participated in procuring the will, and the existence
of an “unnatural” bequest. If the challenger succeeds in raising the
presumption, undue influence has been established unless the alleged
wrongdoer can prove by clear and convincing evidence that the transfer was
voluntary.

In this instance, if it is possible to prove that there was undue influence by

Debbie, the power of attorney can be invalidated. Additionally, if at the time
the power of attorney was signed, the principal was not mentally sound or
was greatly unwell, the power of attorney can be challenged.
ii. Brief on the Breach of Civil and Criminal Laws by an
Administrator

The laws are very clear; an administrator’s improper actions can result in
the breach of civil or criminal laws.

A fiduciary duty is one of the most demanding obligations that exists under
the law. It requires a person in a position of trust and confidence, such as a
trustee, executor, administrator, or personal representative to act with
utmost good faith and loyalty towards the beneficiaries of the trust or
probate estate they are administering.

A fiduciary must always put their beneficiary’s interests first and foremost
before anything else, including themselves. Trustees and executors can
breach their fiduciary duty through fraud, conflicts of interest, self-dealing,
or failure to disclose relevant facts related to the administration of a trust or
probate estate. 

As a result of the fiduciary duty owed by trustees and executors, they are
legally obligated to:
 Place all beneficiaries’ interests above their own.
 Always act in good faith.
 Treat all beneficiaries fairly with honor and care.
 Act honestly, fairly, and reasonably.
 Remain transparent about all relevant, material information.

If a fiduciary fails to comply with these responsibilities, they may have

breached their fiduciary duty. In the case of an executor or trustee, a breach
of fiduciary duty may result in their suspension, removal and/or a
surcharge – a court order requiring them to pay money damages for the
harm caused by the breach. In some cases, fiduciaries can face criminal
charges.
The most frequent penalties for breach of fiduciary duty include suspension
or removal as trustee or executor and the payment of money damages,
attorney fees, and court costs.

When it comes to money damages, fiduciaries who violate their duties may
be ordered to pay compensatory damages, punitive damages, or double or
treble damage. Compensatory damages are intended to make the injured
beneficiary “whole” again after the breach. In other words, this type of
damages reimburses the trust, estate or beneficiary for the money they lost
as a direct consequence of the fiduciary’s breach of duty. 

On the other hand, punitive damages serve to punish the fiduciary for their
wrong actions by requiring them to pay an additional amount of money on
top of the compensatory damages. 

In some situations, double and treble damages may be available as statutory

remedies that double or triple the amount of compensatory damages the
fiduciary must pay under certain laws. 

In addition to damages, the fiduciary may be required to reimburse the

beneficiary for the fees and costs incurred due to the legal action the breach
forced them to take. This includes attorney fees, expert witness fees, filing
fees, and court costs. 

Technically an administrator can go to jail for some breaches of fiduciary

duty, such as theft, fraud, and embezzlement. However, far more often than
not, prosecutors do not have the resources to pursue criminal charges
against fiduciaries who breach their duties and allow the civil courts to
resolve these issues.

In California, breaching a fiduciary duty through theft or embezzlement is

considered a misdemeanor crime when the value of the stolen assets is $950
or less and is punishable by up to 6 months in county jail. If a fiduciary
takes property worth more than $950, they can face charges for felony
embezzlement, which can lead to a sentence of up to 3 years in jail.

An estate beneficiary has a right to sue the executor or administrator if they

are not competently doing their job, breaching their fiduciary duties or
causing financial harm to the estate.

If an estate beneficiary suspects the executor or administrator to have

breached their fiduciary duties – regardless of whether an administrator did
it intentionally or inadvertently – there are steps they can take to protect
both their beneficiary rights and the estate.

Breach of fiduciary duty can consist of anything from the executor or

administrator negligently managing estate assets, to intentionally
misappropriating estate property, to failing to provide information or
accountings to the beneficiaries. The remedies for estate beneficiaries will
depend on the gravity of the misconduct and the extent to which the
misconduct caused financial harm to the estate.

If sufficient evidence exists pointing to a breach of fiduciary duty on the part

of the executor or administrator, estate beneficiaries can proceed with suing
the executor of the estate.

As previously mentioned, estate beneficiaries must have a valid reason for

suing an executor of an estate.

Examples of valid reasons for suing an executor of an estate include: 

 Executor failed to provide accountings to estate beneficiaries
 Executor displayed favoritism toward certain estate beneficiaries
 Executor misappropriated estate assets for personal gain
 Executor mismanaged estate assets
 Executor failed to pay taxes on the estate
  Executor endangered estate assets by making risky investments
 Conflict of interest in which an executor was also a beneficiary and
placed personal interests above those of other estate beneficiaries
If any of the aforementioned scenarios exist, estate beneficiaries should take
action right away in order to have the executor removed and replaced, and
possibly surcharged.

Estate beneficiaries have a right to not only receive accountings from

executors and administrators, but to inspect and challenge those
accountings as well. If an executor or administrator fails to provide
accountings, estate beneficiaries are entitled to use the courts to compel the
executor or administrator to provide them.

Estates can be complex, and as a result, so can estate accountings, which is

why it’s crucial for estate beneficiaries to thoroughly examine the provided
accountings for both errors and red flags (i.e., signs of financial misconduct
or mismanagement of estate assets). If errors or red flags are discovered
upon inspection, estate beneficiaries are entitled to challenge the
accountings in court. Suppose it comes to light that an executor or
administrator caused financial harm to the estate, estate beneficiaries are
entitled to not only petition to have the executor or administrator removed
but surcharged as well.

An Executor has an obligation to expeditiously bring the estate to a

conclusion maximizing the beneficiary’s inheritance. The Executor must
gather the estate assets, settle the deceased’s debts and then distribute
what remains according to the Will or the Rules of Intestacy.

If a beneficiary believes that the Executor, Personal Representative or

Administrator of the estate has committed a breach of fiduciary duty, one
has the right to initiate court action to obtain a court order forcing the
fiduciary to provide a full accounting.
Additionally, states are now creating punitive sanctions for conduct that
they once regulated solely through probate rules.

A. Financial Exploitation

Nearly every state has enacted legislation that criminalizes verbally or

physically assaulting a senior. In addition, as this section explains, many of
these statutes also outlaw the amorphous offense of “financial exploitation”
through “undue influence.”

The seeds of criminal elder abuse statutes were sown in the late twentieth
century. In 1981, the Select Committee on Aging of the U.S. House of
Representatives published a report on the little-noticed crisis of antisocial
conduct directed at seniors. After a year-long investigation, the Committee
reached three sobering conclusions.

First, the Committee determined that about 4% of seniors suffered moderate

or severe mistreatment each year. Second, the Committee found that the
perpetrators were often the victim’s friends, family, or caretakers. Third, the
Committee discovered that shame and fear often drove elders not to report
harm. For these reasons, the Committee declared that elder abuse was “a
full-scale national problem which exists with a frequency that few have
dared to imagine.”

Yet many of these statutes go further and criminalize knowingly engaging in

“financial exploitation.” Although states define “financial exploitation”
differently, all of them employ extremely broad language.

Georgia’s legislation is typical: “[Financial] exploitation” means the illegal or

improper use of . . . [an elder] person’s resources through undue influence,
coercion, harassment, duress, deception, false representation, false
pretense, or other similar means for one’s own or another’s profit or
advantage. Thus, for better or for worse, financial exploitation statutes cast
a wide net by outlawing the acquisition of an elder’s assets by unseemly or
distasteful measures. However, until those prohibitions are more thoroughly
ventilated in the courts, the scope and enforceability of financial exploitation
statutes will remain uncertain.

B. Estate Theft

Incapacity has long been grounds to strike down a gift, contract, will, or
trust. But recently, this complex doctrine has spilled over into criminal law.
As this section explains, a rising number of states have recognized an
offense that we call “estate theft”.

A few laws give courts discretion not to disinherit the abuser. These states
recognize that robotic application of the penalty can be harsh. For example,
Arizona’s original statute unequivocally declared that a wrongdoer “forfeits”
any inheritance from the victim.

In Newman v. Newman (In re Estate of Newman), an Arizona appellate court

carried out this directive and disinherited a child who had quit his job to
take care of his cancer-ridden mother. In 2001, when Celia Newman fell ill,
two of her kids stayed put on the East Coast. Conversely, Celia’s son, Max,
blew up his life to care for her: During the period October 2001 through
October 2002, Max (who was living in San Francisco at the time and
working as a stockbroker) flew to Phoenix at least twenty-four (24) times to
visit his mother. Most of the visits were three to four days in duration,
requiring Max to miss one or two days of work each time. Ultimately, Celia
persuaded Max to move to Phoenix, which he did in about October 2002.
Unfortunately, Max improperly transferred Celia’s retirement funds into an
account that he co-owned and cut his sister out of Celia’s trust. Despite the
fact that Max “was at [Celia’s] beck and call 24/7, the court held that
“[u]nder the plain language of the statute, the forfeiture is mandatory and
automatic if a violation . . . is found.” Shortly after the decision, the Arizona
legislature softened the language of the abuser statute, providing that
judges “may” strip an abuser of “all or a portion” of the estate. In the same
vein, Illinois and Washington give courts the power to limit the impact of the
abuser rule “in any manner [that they] deem[] equitable.”

Disputes over inheritances are spawning criminal and quasi-criminal

proceedings. Undue influence has been transplanted into financial
exploitation statutes. Incapacity has been repurposed as estate theft.

There are therefore available forums to initiate civil and criminal

proceedings against the administrator for her actions/inactions.