Episode 84: Why Your Power of Attorney Can't Do Everything
Episode 84
Host: Jill Mastroianni
Why Your Power of Attorney Can't Do Everything
When someone you love names you as agent under a power of attorney, it can feel like you'll be able to step in and handle whatever needs to be done. But what happens when the law says otherwise?
In this episode, Jill shares the story of a Tennessee woman who discovered that even a broad financial power of attorney has limits. Through a real-life example involving a conservatorship, a probate estate, and a Florida real estate sale, she'll explore what powers of attorney can do, what they can't do, and how thoughtful estate planning can help ensure the right people have the right authority when it's needed most. Along the way, you'll learn why caring deeply about someone doesn't automatically give you the legal ability to act on their behalf, and how one woman's careful estate planning may continue helping others long after she's gone.
What You’ll Learn in This Episode
· Why a financial power of attorney gives authority over your affairs, but not necessarily over every role you hold.
· The difference between acting for yourself and serving in a fiduciary role for someone else.
· Why an agent under a power of attorney cannot automatically step in as an executor, conservator, trustee, board member, or other fiduciary.
· How courts determine who serves as a successor executor or conservator when the original person can no longer serve.
· What a fiduciary is and why fiduciary responsibilities are more common than many people realize.
· How revocable trusts can help avoid probate delays, especially when you own real estate in multiple states.
· Why funding your trust is just as important as creating it.
· The importance of confirming that a named successor trustee is actually willing and able to serve.
· How thoughtful estate planning can remove obstacles for loved ones and even help people you've never met.
Resources & Links
Watch this episode on YouTube: https://youtu.be/ZAUuZrrsot8
Episode 17: How Powers of Attorney Work, When to Use Them, and When It's Too Late to Get One: https://www.deathreadiness.com/podcast/episode-17-how-powers-of-attorney-work-when-to-use-them-and-when-its-too-late-to-get-one
Episodes Featuring Kristen Lewis
Episode 8: A Parents’ Guide to Special Needs Estate Planning: https://www.deathreadiness.com/podcast/a-parents-guide-to-special-needs-estate-planning
Episode 9: How to Choose the Right Special Needs Estate Planning Team: https://www.deathreadiness.com/podcast/how-to-choose-the-right-special-needs-estate-planning-team
Tennessee Estate Planning Services: https://www.deathreadiness.com/estate-planning-solution
Connect with Jill:
· Website: DeathReadiness.com
· Email: jill@deathreadiness.com
· Learn more about Jill’s solutions
· Subscribe to the Death Readiness Dispatch!
· Ask a question for Tuesday Triage
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What happens when someone you love is counting on you, but the law won't let you help in the way they expected? A Tennessee woman serving under a power of attorney learned that some responsibilities can't simply be handed off, no matter how much trust exists between two people. We'll explore the surprising limits of powers of attorney and the estate planning tools that can fill the gaps.
Welcome to The Death Readiness Podcast. This is not your dad’s estate planning podcast. I’m Jill Mastroianni — estate planning attorney, death readiness guide, and your translator for wills, trusts, probate, and the conversations most families avoid. If you’ve been wondering things like, ‘Can a trust protect what I leave to my children?’ ‘What happens if I give someone power of attorney over me?’ and ‘How can I help my parents while respecting their independence?’ You’re in the right place.
My family and I are currently fostering our fourth puppy through Detroit Dog Rescue. We also have three dogs of our own. And puppies are a lot of work. They're not potty trained, they chew on everything, including the cord to my podcast headset while I was editing an episode. Another foster puppy chewed through the power cord for my standing desk, converting it from a standing-optional desk into a sitting-mandatory one. And I'm usually up multiple times a night making trips outside with a puppy in need of a bathroom break.
So why do we do it? This past winter, we decided that we wanted to give back to our local community, and fostering puppies felt like something our family was uniquely suited to do. My husband and I both work from home. We already have three dogs, so caring for dogs is part of our daily routine. And our fifteen-year-old daughter is more than willing to help and really good at it, too, even when a puppy rips a hole through her cowboy boots.
When a puppy comes into our home, we're responsible for a lot. We feed them, train them, and take them to vet appointments. We generally help them learn how to be good dogs.
But there is one thing we don't get to decide. We don't get to decide who adopts them. That's Detroit Dog Rescue's job. And, while that’s the right thing, it’s also sometimes really hard.
After dropping one of our foster puppies off with his new family, I cried the entire drive home. I worried whether his new family would be patient enough with him, whether they understood his quirks and whether he’d get enough exercise. This new family probably wasn't the family I would have chosen. My daughter April sat in the passenger seat reassuring me that he was going to be fine. And she was probably right. I cared deeply about that puppy, but caring deeply doesn't mean I had all the information or that I was the right person to make that decision. I had been given an important role, but not every role.
And that same tension can arise when you're serving as agent under a power of attorney. You can help tremendously. You can manage bank accounts, pay bills, sign documents, and solve all kinds of problems. But there are still limits to your authority. Some decisions belong to a court. Some belong to a trustee. Some belong to an executor. And some responsibilities simply can't be transferred to you, no matter how much the person trusts you or how badly you want to help.
That's exactly the situation one of my friends in Tennessee found herself in.
A common misconception I see is people believing that those who love us can automatically step in and help when something happens. Often, they can't. The right estate planning documents can make all the difference. If you're in Tennessee and would like help creating or updating your estate plan, visit deathreadiness.com/solutions to learn more about my Tennessee estate planning services. That’s deathreadiness.com/solutions.
Normally on The Death Readiness Podcast, I spend a lot of time talking about what happens when people don't plan. We explore the probate delays, family conflicts, and legal headaches that can arise when important decisions are left unmade. Today's story is different.
Today, I get to tell you about a woman who planned so thoughtfully that her decisions may end up helping not only the people she loved, but a family she never even met.
A friend in Tennessee, who I'll call Jordan, called me recently. She was frustrated, emotional, and worried she was letting someone down. Not because she had done anything wrong, but because she had just discovered that there were limits to how much she could help someone she cared about deeply.
Jordan had agreed to serve as agent under a financial power of attorney for a very close friend, who I'll call Cindy. Cindy was in hospice care and very near the end of her life.
A financial power of attorney is a legal document in which you name someone you trust to make financial decisions and handle financial matters on your behalf.
If you’d like a deeper dive into powers of attorney, I’ll link to Episode 17 in the show notes, How Powers of Attorney Work, When to Use Them, and When It’s Too Late to Get One.
When Cindy's health began to decline, Jordan stepped up. She assured Cindy that she would take care of things. And Cindy was relieved because she was the type of person who, when she was healthy, took care of everyone else. Even while facing the end of her own life, she was still worried about the people who depended on her. Jordan believed the power of attorney would allow her to step into Cindy's shoes and handle whatever needed to be handled. And for the most part, it did.
Under Cindy's power of attorney, Jordan was able to manage bank accounts, pay bills, communicate with financial institutions, and handle other financial matters. While Cindy was still healthy enough to participate, the two of them had gone to the bank together, spoken with Cindy's financial advisor, and made sure the people and institutions closest to Cindy understood that Jordan would eventually be helping manage her affairs.
But then Jordan ran into a problem. Actually, two problems. Cindy was serving as conservator for her disabled brother. A conservator is someone appointed by a court to make financial and sometimes personal decisions for another adult who is unable to manage those responsibilities on their own. Cindy trusted Jordan to take over that role if something happened to her. In fact, she expected Jordan to take over that role. Cindy was also serving as Executor of her sister's estate in Florida. She expected Jordan to see that responsibility through as well.
And that's when Jordan learned something that surprised both of them. The power of attorney did not give Jordan the authority to step into either role. The attorneys representing Cindy in her capacity as Executor of her sister's probate estate in Florida and separately as Conservator for her disabled brother in Tennessee delivered some disappointing news. Jordan could not step into either role.
Now, this didn't make much sense to Jordan at first. After all, she was Cindy's agent under a power of attorney. She could access Cindy's bank accounts, pay Cindy's bills, communicate with financial institutions, and manage Cindy's personal financial affairs. So why couldn't she simply continue serving in these other roles, too? The answer is that Cindy wasn't acting for herself in either situation.
As Executor of her sister's estate, Cindy wasn't managing her own assets. She was administering an estate on behalf of beneficiaries and creditors. As Conservator for her disabled brother, Cindy wasn't managing her own finances. She was managing assets and making decisions for her brother. In both cases, Cindy was serving in a fiduciary capacity.
A fiduciary is someone who has been entrusted to manage money, property, or decisions for another person and is legally required to put that person's interests ahead of their own. And that's where the distinction becomes important. By signing a power of attorney, Cindy gave Jordan authority over Cindy's assets and financial affairs. The power of attorney allowed Jordan to step into Cindy's personal financial shoes. But it did not automatically allow Jordan to step into Cindy's fiduciary shoes.
When Cindy could no longer serve as Executor, the probate court would look to the Will and applicable law to determine who should serve next. When Cindy could no longer serve as Conservator, the court that appointed her would determine who should be appointed as successor Conservator. The power of attorney gave Jordan authority over Cindy's affairs. It did not give her authority to take over every role Cindy happened to hold.
Let me give you a few examples. Suppose Cindy served on the board of a local nonprofit. Could Jordan automatically become a board member just because she's Cindy's agent under a power of attorney? No. The nonprofit would follow its bylaws to determine who fills that vacancy.
Or let's say Cindy was the treasurer of a local soccer club. Could Jordan automatically take over that role? Again, no. The organization would follow its own rules and procedures to appoint a new treasurer.
Here's an even bigger example. If the President of the United States becomes unable to serve, we don't look to the person named in the President's power of attorney. We look to the United States Constitution—specifically the 25th Amendment—which says the Vice President takes over.
So what do all of these situations have in common? In each case, the person was serving in a role created by some other governing document. The nonprofit's bylaws. The soccer club's rules. The United States Constitution. And the same thing is true for Cindy.
As Executor of her sister's estate, Cindy was serving because her sister nominated her in her Will and the probate court approved that appointment. If Cindy could no longer serve, the court wouldn't look to Cindy's power of attorney to find a replacement. It would look to the Will and applicable state law. A conservatorship works the same way. The court appointed Cindy to serve as Conservator for her disabled brother. If Cindy can no longer serve, the judge first looks to see whether a successor or standby conservator has already been named.
For example, my brother has Down syndrome. My father serves as his Conservator. I am the standby Conservator. That means if my father can no longer serve, I step into that role because the court has already approved my appointment.
As far as my brother’s conservatorship is concerned, it doesn't matter who my father named as agent under his power of attorney. Why? Because when my father is acting as Conservator, he's not acting for himself. He's acting for my brother. The same was true for Cindy.
Jordan could step into Cindy's personal financial shoes. She could pay Cindy's bills, manage Cindy's accounts, and handle Cindy's affairs. But she couldn't step into positions that Cindy held on behalf of someone else. You may have served as a fiduciary without ever hearing the word “fiduciary.” Executor, trustee, agent under a power of attorney, and conservator are some of the more traditional fiduciary roles. But fiduciaries are everywhere. If you've ever served as the treasurer of a youth sports league, sat on the board of a nonprofit, or even served on your homeowners association board, you've likely had fiduciary responsibilities.
A fiduciary is simply someone who has been entrusted to manage money, property, or decisions for someone else and is required to put that person's interests ahead of their own. And that's why Jordan couldn't simply step into every role Cindy held. But then Jordan told me about another problem.
Cindy and her sister owned real estate in Florida that they had inherited from their other sister—the same sister whose estate Cindy was serving as Executor of. The property is under contract, and the closing is scheduled for the end of this month. Jordan was worried Cindy wouldn't live long enough to make it to closing.
She asked the Florida attorney handling the estate what would happen if Cindy died before the sale was completed. And the answer wasn't encouraging. If Cindy died owning the real estate in her individual name, her interest would become part of Cindy’s probate estate. Because Cindy lived in Tennessee and the property was located in Florida, her family would need to open a probate estate in Tennessee and then open a separate ancillary probate proceeding in Florida before someone could be appointed to sign the closing documents.
The closing could be delayed for months. I asked Jordan why that possibility bothered her so much. Her answer told me everything I needed to know about Cindy. The buyers were a young family. Their lease had already ended, so they were temporarily living with the wife's parents in a very small house. They were running out of space, running out of patience, and running out of time. The wife was due to give birth to their third child in about a month.
Cindy desperately wanted them to move in before the baby arrived. Cindy was in hospice care. She was nearing the end of her own life. And yet one of her biggest concerns was whether a family she barely knew would be inconvenienced by her death. She wanted them to get settled, have room for their growing family and be able to bring their new baby home to their new house.
So I asked Jordan a question. “Does Cindy have a revocable trust?” A revocable trust is a legal document that allows you to create a set of instructions for managing your assets during your lifetime and after your death. You stay in control while you're alive and able to make decisions, but you've also named someone to step in if something happens to you and provided instructions for what should happen to your assets after your death.
As it turns out, Cindy did have a revocable trust. And that wasn't an accident. Cindy had been very intentional about her estate plan because her brother is disabled and receives means-tested government benefits. She wanted to make sure he would be cared for after her death, but she didn't want an inheritance to accidentally disqualify him from the benefits he depends on.
Special needs estate planning is a very technical area of estate planning, and it's beyond the scope of today's episode. But if you'd like to learn more, I'll link in the show notes to a couple of episodes featuring attorney Kristen Lewis from Atlanta, Georgia, who specializes in special needs planning.
Now here's where Cindy's revocable trust became important. One of the benefits of a revocable trust is that assets titled in the name of the trust avoid probate. This can be especially helpful if you own real estate in a state other than the one where you live.
Cindy’s power of attorney specifically gave Jordan the authority to transfer real estate on Cindy’s behalf. So Jordan was able to transfer Cindy's interest in the Florida real estate into Cindy's revocable trust. That one step changed everything. Instead of the property becoming stuck in probate, the trustee would have the authority to sign the closing documents and complete the sale.
If you listened to last week's episode, you might be wondering whether the successor trustee would actually be willing to serve. After all, one of the lessons from that episode was that the person or institution you name as trustee doesn't have to accept the job.
But Cindy had thought about that, too. She named a corporate trustee because she wanted someone with professional experience administering special needs trusts. And she didn't simply write the trustee's name into the document and hope for the best.
She contacted the corporate trustee in advance, confirmed that they would be willing to serve, and made sure they were comfortable with the terms of the trust and the value of the assets involved. And as her health declined, she kept them informed so they would be prepared when the time came to step into their role as successor trustee. In other words, Cindy didn't just create a plan. She made sure the plan would actually work.
Because of that planning, the Florida property won't have to pass through probate before the sale can close. The young family won't have to wait months for a Tennessee probate and a Florida ancillary probate to be opened. And they'll be able to move into their new home, unpack their boxes, and get settled before welcoming their third child.
Cindy may not be there to see it happen. But because of the decisions she made while she was alive, she'll still be helping people after she's gone. And that's one of the most powerful things about estate planning. At its best, it's not just about transferring assets. It's about removing obstacles for the people who come after us.
Yesterday, my daughter and I left Michigan for New York, where we'll be spending the summer with my dad on a lake in the Adirondacks. Before we left, I asked Detroit Dog Rescue if our foster puppy, Michael, could come with us. They said no. He needed to stay in Michigan for veterinary appointments and to meet potential adopters.
So Michael is back in Michigan with my husband. Even so, I’m worried about Michael. It’s not that I think I should be the one deciding where he ends up. Or because I don't trust the people whose job it is to make those decisions. I worry because I care about him.
Jordan feels the same way about Cindy. She wants to help, solve every problem and carry every responsibility so that Cindy won’t have to worry about anything during the final chapter of her life.
But sometimes helping isn’t doing everything yourself but making sure the right person is in the right role. And that's exactly what Cindy did.
She named Jordan to help with her personal finances. She worked with professionals to ensure her brother would continue to be cared for. She coordinated with a corporate trustee who was prepared to administer a special needs trust. And because of the planning she had done, a young family may be able to bring their new baby home without months of probate delays standing in the way.
No one can replace Cindy or take over every role she held. But because Cindy understood the difference between caring for people and being responsible for every decision affecting them, she built a plan that allowed the right people to step in where they were needed.
And in many ways, that's what good estate planning is all about, making sure the right people have the right authority at the right time.
If you're in Tennessee and you've been putting off your estate plan, consider this your reminder. The people you love may be willing to help, but willingness and legal authority aren't the same thing. A thoughtful estate plan can help ensure the people you trust have the authority they need when it matters most. To learn more about my Tennessee estate planning services, visit deathreadiness.com/solutions. That's deathreadiness.com/solutions.
Thanks for listening today.
This is Death Readiness, real, messy and yours to own. I’m Jill Mastroianni and I’m here to help you sort through it, especially when you don’t know where to start.
Hi, I'm April, Jill's daughter. Thanks for listening to The Death Readiness Podcast. While my mom is an attorney, she’s not your attorney. The Death Readiness Podcast is for educational and entertainment purposes only. It does not provide legal advice. For legal guidance tailored to your unique situation, consult with a licensed attorney in your state. To learn more about the services my mom offers, visit DeathReadiness.com.
