If you think a Durable Power of Attorney (DPOA) is just a form you fill out with your names and names of your family members you want to help you in case of incapacity, think again! As I always tell my clients, a DPOA is a powerful legal document and it's not just a form!
Reversing a trial court, a New York appeals court holds that an attorney-in-fact with authority over estate transactions has the power to amend an irrevocable trust that was created before the execution of the power of attorney. Matter of Matter of Perosi v LiGreci (N.Y. Sup. Ct., App. Div., 2nd Dept., No. 2011-02446, July 11, 2012).
Nicholas LiGreci created an irrevocable trust to benefit his three children, and named his brother as trustee. Later, Mr. LiGreci named his daughter Linda Perosi as his attorney-in-fact under a durable power of attorney. The power of attorney granted Ms. Perosi authority over estate transactions and the power to designate the trustee of any trust. According to New York statute, an irrevocable trust may be amended or revoked by the trust's creator with the written consent of the trust beneficiaries. As attorney-in-fact and with the consent of the other beneficiaries, Ms. Perosi executed an amendment to the trust removing the trustee and naming her son as trustee.
After Mr. LiGreci died, Ms. Perosi and her son filed for an accounting. The trustee moved to set aside the amendment. The trial court granted the motion, holding that the power of attorney did not give Ms. Perosi the power to amend estate planning devices that were created before the execution of the power of attorney. Ms. Perosi and her son appealed.
The Supreme Court of New York, Appellate Division, reverses holding that the attorney-in-fact has the authority to amend the trust. According to the court, the attorney-in-fact was the alter ego of the creator; therefore "because the creator was alive and had not revoked the power of attorney at the time the amendment was executed, the actions of the attorney-in-fact were within the bounds of her authority."
So when we sit down to discuss powers of attorney, we need to pay special attention to the specific powers you grant your agent!