Financial Power of Attorney May Not Grant as Broad Powers as You Might Think

May 2, 2012 at 4:37 pm | Latest News | No comment | By Per Oscarsson

            A power of attorney authorizes a person (the attorney-in-fact) to act on behalf of another person (the principal).  Sometimes the power of attorney authorizes the attorney-in-fact to make decisions on behalf of the principal relating to the principal’s health care as well as to the principal’s non-health care, or financial, matters.  Sometimes the power may be granted only as to financial matters.  Often, the attorney-in-fact for financial matters has “all powers of absolute ownership” of the principal or the document granting the power of attorney contains language that the attorney-in-fact “shall have all the powers the principal would have if alive and competent.”  This implies that the attorney-in-fact could do anything on behalf of the principal that the principal could do.  But that is not the case in the state of Washington.

                In Washington, even though a power of attorney contains either of the phrases quoted above, the attorney-in-fact does not have all of the principal’s powers.  For example, the attorney-in-fact does not have the power to make, amend, alter, or revoke the principal’s wills or codicils.  In addition, there are a number of powers the attorney-in-fact does not have unless they are specifically provided for in the document granting the power of attorney.  For example, unless specifically granted in the document, the attorney-in-fact does not have the power to change the beneficiary on the principal’s life insurance policies, to change payable on death or transfer on death beneficiary designations, to make gifts of property owned by the principal, or to disclaim property.  The Washington Legislature recently amended the law to add to the list of powers that must be specifically granted in the document in order to be effective.  If you are considering granting a financial power of attorney to someone, or updating an existing financial power of attorney, please contact Per Oscarsson or one of the other members of Beresford Booth’s Planning/Probate Group.

Do You Have a Claim in a Probate?

November 14, 2011 at 12:50 pm | Latest News | No comment | By Per Oscarsson

             The answer to that question may not be as simple as you might think.  Usually, you know if someone owes you money or some other obligation such as a personal guaranty of a third party’s debt.  But, what if the obligation is not yet due and payable when that person dies?  You might think that you don’t have a claim because the obligation is not yet due.  However, you could lose your ability to collect if you don’t act promptly after that person dies.

            Washington’s probate statutes include a section known as the “non-claim statute,” which provides that a person having a claim against the deceased person may not maintain an action on the claim unless a personal representative has been appointed and the claimant has presented a claim as set forth in the chapter of the probate statutes dealing with claims.  Another provision of the statutes requires claims to be in writing and, if the claim is contingent or not yet due, to set forth the nature of any uncertainty or the date when the claim will become due.  Yet another provision sets forth the deadline for filing creditor’s claims against a probate estate.

            A recent case in the Washington Court of Appeals held that a creditor who had not filed a claim in the probate could not enforce a personal guaranty signed by the deceased even though the guaranteed obligation was not due at the time of the deceased’s death and was not due at the expiration of the time to file creditor’s claims in the estate.  In that case, a corporation entered into a 10 year lease as tenant.  The corporation’s president personally guaranteed the corporation’s obligations under the lease.  The guaranty provided that, in the event of the guarantor’s death, the guaranty would remain in full force and effect and be binding upon the guarantor’s estate.  Over three years into the lease term, the corporation’s president died and a probate of his estate was commenced.  At the time of the president’s death, the corporation was in compliance with the lease.  The personal representative of the president’s estate published a notice to creditors and sent a copy to the corporation’s landlord.  The landlord did not file a claim before the claim filing period expired.  Six months after the claim filing period expired, the corporation partially defaulted under the lease.  Five months after that, the landlord filed a court action to enforce the president’s personal guaranty.  The Court of Appeals upheld dismissal of the landlord’s court action because the landlord failed to comply with the “non-claim statute” even though the corporation was not in default under the lease when the claim filing period expired.

            Application of the “non-claim statute” is not limited to personal guarantys of the deceased.  It can apply to various obligations that the deceased incurred during his or her lifetime, whether or not those obligations are due at the time of the deceased’s death or at the expiration of the creditor’s claims filing period in a probate of the deceased’s estate.

            If we can assist you with asserting or defending against such a creditor’s claim, please contact us at 425-776-4100.

Is Your Will Up-to-Date?

June 17, 2011 at 12:59 pm | Latest News | No comment | By Per Oscarsson

          Many people have their Will prepared, sign it, and put it in their safe deposit box, thankful that they got it checked off their “to do” list.  But, that may be the last time the Will is seen until the person dies and it comes time for probate.  In the meantime, there may have been a change in circumstances or a change in the law that affects the terms of the Will and justifies a codicil (or amendment) to the Will or a new Will.  For example, a person might have done a Will while they were single and they have now married, or a person might have done a Will when they had no children and they now have children born to them or adopted by them, or someone in the Will is no longer intended to be included in the Will for whatever reason.

             Tax laws seem to change constantly.  Tax planning in the Will may not have been a concern at the time the Will was signed because the person’s assets may not have been of sufficient value that tax planning was necessary.  However, as that value increases over time, tax planning may be more appropriate, particularly if that value is approaching the level at which federal estate taxes and/or state death taxes become payable.

             Laws relating to Wills themselves may also have changed since the Will was signed.  A Will that was valid when signed may no longer be valid due to changes in the law relating to Wills after the Will was signed.  I know of a case in which a Will signed in 1965 was initially rejected for probate in 2000.  The reason?  The requirements concerning witnesses signing the Will had changed after the Will was signed and the Will did not meet the new requirements.  Fortunately, it was possible to get an affidavit from the original witnesses 35 years after the Will was signed and the Will was then admitted to probate.  But, what if those witnesses could not be located or had died?  It would have been as if the Will’s maker had died without a Will.  The distribution of the person’s property under those circumstances may not have been the same as the person intended when they signed the Will.  The lesson?  If it has been awhile since your Will was prepared, it may be time to review it to see if it still expresses your wishes or it may be time to have it reviewed to see whether changes in applicable law require changes in its terms.  If we can assist you with a review of your Will, please call us at 425-776-4100.