Jan L. Warner
Question (by e-mail): When it came time to sort out my father's estate and probate his will under which my brother and I are the sole beneficiaries, we began to suspect that during the last years of my his life when he was incapacitated, my stepmother - who has two children of her own -- used my father's power of attorney to gain access to his assets and income and used his finances to fatten her wallet and to provide benefits to her children.
According to her story, the funds and assets meant for my brother and me under Dad's will were used to pay for his medical care and their joint living expenses. But we believe that she did not use any of her premarital assets or income or any of the property which had been set aside for her under the terms of the premarital agreement she and my father signed. We also believe that my stepmother used funds which would have ultimately belonged to me and my brother, made gifts to her children, and otherwise diverted assets designated for us.
But our lawyer says that since the power of attorney is very broad, our stepmother could have done practically anything with the money without making an accounting. He also says that although our stepmother was not permitted to steal or act fraudulently, we must prove what we think she did. But we can't gain access to any of our father's records. The executor of his estate has refused to seek records from my stepmother, will not get a copy of the tax return for the year in which he died, made only a cursory review of withdrawals from his accounts, and performed no audit of medical bills and insurance reimbursements. He says that my brother and I cannot get copies of any of these records due to privacy laws -- even though we are the ultimate beneficiaries under my father's will,.
Because our father's estate was so depleted, our lawyer suggests we just put it all behind us rather than run up large legal fees. But we are devastated. Is the state of the law such that a devious stepmother can walk away with everything or do we have any rights to ensure that family assets are passed on in accordance with our father's wishes?
Answer: The remarriage of elderly people can cause many intra-family problems unless addressed in advance with appropriate documents that clearly state the intentions of the individuals involved. Not to do so can result in conflicts like yours that could have otherwise been avoided.
First of all, we think your lawyer and the executor should read the premarital agreement to see what your father and stepmother agreed upon. If you and your brother were the sole beneficiaries under your father's will, we would bet dollars to doughnuts that in return for the transfer of assets to which you refer, your stepmother probably waived her rights to share in his estate. Otherwise, she would now be making a claim for her elective share. In addition, we assume that there would be provisions about support issues, including who was to pay what and from what source.
The next step is to carefully review the wording of the power of attorney to find out exactly what authority your father gave your stepmother as, if the powers are not sufficiently specific to cover what you think your stepmother did, she may have overstepped her authority. For example, according to the law of most states, a general power of attorney does not include the authority to make gifts on behalf of the principal unless specifically stated in the document. Some powers of attorney include only limited gifting authority - for example, $10,000 per year per beneficiary.
Since the Internal Revenue Service uses this legal principal to require the return of "gifted" funds to an estate for purposes of calculating the estate tax, as a beneficiary who feels there was an abuse, we believe that you should insist on an accounting and should attempt to compel the executor to do his or her job and have the funds returned to the estate.