As a part of many estate and elder law plans, an elder law attorney will draft a financial power of attorney for a client. The client, as the principal, names another person, an agent, to act on their behalf. The power of attorney can be effective immediately, meaning the agent can act even if the principal has capacity. Or, the power of attorney can be springing, meaning the agent can only act if the principal becomes incapacitated and unable to manage his or her own financial affairs. But what happens if an agent begins to act under the document before the springing provision has been satisfied? Are the agent’s acts legally binding?

In a case out of the Superior Court of Pennsylvania, this issue was litigated. Here, Mercedes had six children. In 2013, she named child Joseph as her agent on a power of attorney form that Joseph had downloaded off the Internet. Therein was a clause that stated Mercedes must be incapacitated or disabled and there must be a physician’s statement to that effect before the power of attorney became effective and Joseph would be able to act. However, Joseph began acting as Mercedes’ agent immediately after signing the document, in routine financial affairs. Mercedes had not been declared incompetent and had not obtained a written physician’s statement.

Language can be tricky, imprecise, and confusing. When drafting legal documents, it is important to convey a certain meaning without needing external input on deciphering that meaning. After all, these documents may need to be interpreted after the person expressing their wishes has died or is incapacitated. Having a legal document with a term that can be ambiguous can lead to family discord, a lack of the Grantor’s intent being carried out, and even litigation.

In a case out of Texas, the meaning of the word spouse was litigated. Here, the Grantor left a share to her son’s spouse. To whom did spouse refer? Did it refer to the son’s spouse at the time the trust was established and executed, or did spouse refer to his wife at the time the trust was administered after the Grantor’s death?

As a part of most elder law plans, an attorney will recommend that a client execute powers of attorney. These documents give another, the agent, powers to do certain acts on behalf of the person signing the document, the principal. In a Healthcare Power of Attorney, these powers would relate to being able to make healthcare decisions, access medical records, and talk to doctors. The powers held by the agent under a Financial Power of Attorney can be very broad, including property powers, financial powers, business powers, and legal action powers. This Financial Power of Attorney will be what we focus on here.

The agent, when acting under the power of attorney, is acting in a fiduciary capacity. What does this mean? The agent is basically stepping into the shoes of the principal and so must act in the best interest of the principal. Being an agent and having the powers outlined in the power of attorney is not authorization for the agent to do whatever he or she wants with the principal’s finances. But what happens when the agent is a spouse? Are the lines blurred? Can a spouse-agent transfer property to herself and not run afoul of her fiduciary obligations?

This topic was recently litigated in North Dakota. In Estate of Lindvig, the Supreme Court of North Dakota ruled that the spouse-agent could make such transfers. Let’s take a closer look at this case.