Minnesota Court Review of Misconduct by an Agent under a Power of Attorney
In creating a power of attorney, the principal gives an agent (also called an attorney-in-fact) authority to act on his or her behalf. Regrettably, agents sometimes abuse that authority. Fortunately, Minnesota courts have authority to address situations involving misconduct by an agent under a power of attorney.
A case decided by the Minnesota Court of Appeals provides an excellent example of court review of abuse of authority by an attorney-in-fact. The situation involved an agent who changed the beneficiaries of five IRA accounts just two days before the principal’s death. (The agent was one of the new beneficiaries.)
POA Agent Misconduct Case Involving IRA Beneficiary Changes
In 2008, Robert Fashant created a power of attorney naming Julie Haekenkamp as his agent. (The court opinion does not explain Julie’s relationship to Robert. The relationship is not relevant to the case.) Subsequently, in 2011, Robert married Merilee Doll.
Just prior to and after his marriage to Merilee, Robert executed a number of legal documents designating her as sole heir of his estate and beneficiary of his assets. One of the 2011 documents was a power of attorney naming Merilee as his agent. He also named Merilee as the sole beneficiary of his five IRA accounts. However, Robert did not revoke the previous power of attorney naming Julie as his agent.
Within a few years of the marriage, Robert passed away. Two days before his death, Julie exercised her authority under the 2008 power of attorney. She submitted change of beneficiary forms to the custodian of the five IRA accounts, effectively removing Merilee as the sole beneficiary. Julie designated herself and three other individuals as primary beneficiaries of the five IRAs.
Through her attorney, Merilee filed a petition in Minnesota district court, asking the court to declare her the rightful owner of the IRA accounts. Applying equitable principles to the facts introduced into evidence, the judge determined that Robert clearly and unambiguously intended Merilee to be the beneficiary of his IRAs. He voided Julie’s action changing the beneficiaries.
On review, the Minnesota Court of Appeals upheld the district court’s decision. The Court held that the district court did not abuse its discretion in concluding that Robert intended his wife Merilee to be beneficiary of the IRA accounts and voiding the change of beneficiaries.
While this case presented rather unusual facts, it provides an excellent illustration of the authority of a Minnesota district court to review potential abuses of authority by an attorney-in-fact under a power of attorney.
Misconduct by an Agent Acting under a Power of Attorney
Minnesota statutes impose strict responsibilities on an agent under a power of attorney. If an agent violates those duties, specific individuals may petition the court for an accounting and other appropriate relief.
Many different situations may constitute an abuse of authority or breach of duty by an agent under a power of attorney. Misconduct by an agent may occur through:
- Diversion of funds to the agent’s own use (self-dealing)
- Failure to meet responsibilities under the POA to manage finances in the principal’s best interests
- Conduct constituting financial fraud or deception
- Exertion of undue influence over the principal
Under Minnesota law, an interested person may petition the district court for relief in a situation involving possible abuse of authority under a power of attorney. The statute defines interested persons to include:
- The principal (person creating the POA)
- A nominated or appointed guardian or conservator
- Legal representative or attorney for the principal
- The spouse, parent, adult children, and siblings, or next of kin if none of these people are living or can be located
- An adult person who has lived with the principal for more than six months
- A duly appointed health care agent
- Any other person designated by the court
Situations involving abuse of an agent’s authority under a POA often arise following the principal’s incapacity or death. In some cases, the misconduct does not even become known until the principal’s estate begins the administration process.
If you know of circumstances involving a family member or relative that may involve abuse of a power of attorney, you should consult with a knowledgeable attorney at the earliest possible opportunity. Additional information about this kind of litigation is available in our blog article, Power of Attorney Litigation in Minnesota.
Talk With an Experienced Minnesota Probate & Estate Litigation Lawyer About Misconduct of an Agent under a Power of Attorney
My probate and estate litigation practice at the Dave Burns Law Office includes court petitions involving actions of an agent under a power of attorney. I assist family members and others concerned about the welfare of their loved ones.
I concentrate my practice on the Twin Cities metro area and am available to meet with clients in both Minneapolis and St. Paul. If you would like to discuss a situation that may involve misconduct by an agent acting under a power of attorney, please contact me at (612) 677-8351 or by email at firstname.lastname@example.org. I welcome inquiries from clients and referring attorneys throughout the State of Minnesota.
The Dave Burns Law Office hopes you find this article helpful. But please do not rely on it as legal advice. The law changes regularly and the outcome of any legal matter depends on its unique circumstances. View full disclaimer