Can a Wife Use a Power of Attorney to Trump Her Husband’s Will?
DEVELOPMENTS IN VERMONT LAW
By Kimberly B. Cheney
Can a Wife Use a Power of Attorney to Trump Her Husband’s Will?
Louis Kurrelmeyer Sr. died in 2001. He was survived by his second wife, Martina, and three children, including a son, Louis Jr. Martina and Louis Jr. both claimed they were entitled to the house worth about $500,000. Louis Jr. based his claim on Louis Sr’s 1980 will which left the house to Martina for her life and then to the children.
However, in 1995, Louis Sr. had a stroke. He was competent. He hired an estate planning attorney to provide for greater security for Martina. The attorney recommended Louis Sr. grant Martina a power of attorney to manage his affairs. Martina then used the power of attorney to transfer the house to a trust with herself and one of Louis Sr.’s daughters as co-trustees. The trust gave her more rights than a life estate would. She could have the trust pay taxes and upkeep on the house, and gave her the power to sell it and buy another house outright. On her death, whatever was left in the trust would go to the children.
Louis Jr. sued, claiming the power of attorney couldn’t trump the will. He argued Martina had a fiduciary duty not to profit for herself by using the power of attorney to benefit her at the expense of the children; so the trust was void. Not so, Martina argued. She had only used the power of attorney as recommended by the estate planning attorney, which had saved inheritance taxes and carried out Louis Sr’s intent to provide for her financial security. Louis countered that the attorney’s testimony as to what Louis Sr. wanted shouldn’t be considered, but only the power of attorney itself. The trial court agreed with Martina and Louis Jr. appealed.
The Supreme Court ruled for Martina. It held that the reach of the power of attorney had to be determined by examination of the circumstances under which it was made. The attorney’s testimony explained those circumstances and was admissible to prove the intent of Louis Sr in granting the power of attorney to benefit Martina. Further, the Court ruled, the mere possibility that Martina would sell the house and live off the income from it thereby diminishing the children’s inheritance was speculative. Accordingly there was no evidence of a breach of wife’s fiduciary duty.
The Court‘s ruling leaves open how it would rule if Martina actually did persuade the daughter trustee to allow Martina to use the trust to benefit herself. The Court remains as a watchful eye over what Martina does, and Louis Jr. poised for litigation in the future. Checks and balances in family wars.
