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San Antonio Probate, San Antonio Estate Planning, San Antonio Elder Law


San Antonio Express-News
August 17, 2001

Agents About to Have New Liabilities and Responsibilities

© 1989-2004, Paul Premack

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Dear Mr. Premack: My uncle never married. He was mourning his sister, and was a bit mentally confused and on kidney dialysis, when he granted a nephew Power of Attorney. The nephew assigned himself pay-on-death rights to $230,000, even though uncle’s Will said the estate was to be divided among 10 nephews and nieces. When uncle died, that nephew took it all. Our aging population is a vulnerable target when they need help managing affairs. How do you check performance once you've appointed someone as an Agent? – MV via Email

You have posed a very complex question. Answers have been debated by very intelligent and well-trained minds, and no single solution has been found. Whenever an elder becomes mentally frail, that person needs to be cared for and to have assistance with financial matters.

Using Durable Power of Attorney is a very common way to select a caretaker (called an Agent) and to give that Agent legal authority to manage the elder’s affairs. Other options include court-supervised Guardianship – which can be slow, expensive and burdensome – or a Living Trust – in which a professional manager can be appointed. Each has its own pros and cons.

But your uncle relied on a power of attorney, and you ask how to check performance of the Agent once the powers are granted. The same question was asked by the Texas legislature this year. They came up with two changes to Texas law.

First, House Bill 1813 (effective on September 1, 2001) changes the Texas criminal statutes. If the Agent in a power of attorney intentionally, knowingly, or recklessly misapplies the principal’s assets – that is, uses them in a way that is not beneficial to the elder or in a way that contradicts the power of attorney – the act can be investigated as a crime.

The offense is called "misapplication of fiduciary property." If convicted, the Agent’s punishment is keyed to the value of the misapplied assets. For instance, if the amount is less than $20, the crime is classified as a Class-C misdemeanor, punishable by a fine no greater than $500. It reaches the level of "state jail felony" if the amount is between $1,500 and $20,000. And if the amount misappropriated exceeds $20,000 it is a first-degree felony – punishable by 5 years to life in prison and a $10,000 fine.

Second is House Bill 1883, also effective on September 1, 2001. As it was first introduced, this bill would have required every Agent to post a bond, would have required a waiting period before the Agent could transfer real estate, and would have required recording of all Durable Powers of Attorney with the local county clerk’s office. Those are heavy requirements that would make powers of attorney difficult for everyone to use, to avoid but a few cases of abuse.

The final version of HB 1883 did not include those requirements. Instead, it imposes strict accounting requirements on the Agent. It imposes the duty to keep the principal informed, and to account for actions taken pursuant to the power of attorney. An Agent is required to keep a record of each action taken or decision made, and the principal can ask for an accounting at any time. The agent must provide full details of all actions taken. If the principal is disabled or confused (like your uncle), the new law allows him to select someone to oversee the Agent’s actions by receiving the accountings. If irregularities are found, the criminal statute may kick-in.

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Disclaimer: This column answers a specific legal question offered by an individual in the South Texas area. The answer may or may not match your individual situation. Be careful not to treat this column as specific legal advice that meets your individual needs. It may give you a solid basis for discussion with your own attorney. Also, please be aware that laws change. You should consult with your personal attorney before you take any action on this or any legal issue.

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