Taxation & Estate Planning

Power of Attorney Holder Could Not Modify Trust

By Michael D. Bonasera, Esq.

This post by Charles Rubin of the Rubin On Tax Blog is an interesting one because it touches on a running debate in my firm, which is: To what extent should one of court client’s durable powers of attorney be able to modify their trust?

Some don’t like the extent of the power granted by our durable POA because it essentially allows the POA holder to completely restate or even revoke the Grantor’s trust. Usually, when dealing with husbands and wives the argument is merely academic. But such a broadly applied power has always made me nervous.

The case of ROSE GURFINKEL, etc., et al., Appellants, vs. JOSI, a/k/a JOSEPH MARMOR, etc., et al., Appellees., 3rd District. Case No. 3D06-1616. L.T. Case No. 05-3664. (Opinion filed December 12, 2007) speaks to the principal that when a trust and a POA are arguably in conflict, the trust will prevail:

In [this] case, a settlor’s revocable trust prohibited any conservator, guardian, or ?any other person? from exercising the rights of amendment during the lifetime of the grantor. A holder of a durable POA asserted that the POA allowed him to modify the settlor’s trust.

The court made short-shrift of the POA holder’s argument, and held that the prohibition language include a POA holder.

A more interesting case would have arisen if the POA explicitly granted the power to amend to the POA holder - then there would have been a direct conflict between the POA and the trust. However, in the instant case, while the POA holder did assert that some language under the POA authorized amendment, the POA language really didn’t have any clear language to that effect.

Full post as published by The Ohio Trust & Estate Blog on February 16, 2008 (boomark / email).