A client came to me with a problem. The wife’s mother had given her daughter a power of attorney a few years ago. The power of attorney purported to give the daughter the power to control the financial assets as well as manage the real property owned by the mother.
The mother later became afflicted with dementia. As her mother condition deteriorated, the daughter was able to use the Power of Attorney to take control of assets held in a bank and were able to use them to care for the wife’s mother. The mother’s need for care increased, as did the cost of her care. In order to continue to provide for the mother’s needs, a loan would need to be taken out against her real property.
This is where the daughter ran into trouble. When trying to take a loan out on the real property, she and her husband were told that they needed to be on the title to the property. The loan officer told them that signing as a Power of Attorney was insufficient. In fact, the loan officer told them that the simplest way to obtain the was would be to transfer the property to a trust where they would be trustees. Then they would be able to sign the loan as co-Trustees. They had their attorney draw up the trust, which the daughter signed using the power of attorney to create the trust for her mother.
After the trust was created and the property transferred to the trust, the title company noticed that the Power of Attorney had a provision which specifically disallowed the creation of a Trust. The attorney didn’t notice this when the attorney created the power of attorney, or the subsequent trust.
The only choice left to the clients is to have the court appoint them as conservators, and have the court approve creation of a trust. This process will cost thousands of dollars and take time to create. While waiting for the Court to act, the couple has had to use their savings to provide for the wife’s mother.
A careful reading of the power of attorney when it was created could have avoided this problem by allowing the daughter to create the trust when it was needed.