Power of Attorney Disputes

A Power of Attorney (“POA”) is a document giving someone else the legal authority to make financial and other decisions for someone else. Typically, a POA is executed to allow someone (the “Agent”), usually a family member, to managing the finances of someone who is ill or will likely become incapacitated (the “Principal”).

Once an Agent starts acting under a Power of Attorney, Texas law imposes fiduciary duties on the Agent – some of the highest duties imposed by Texas civil law. The two most commonly litigated duties arising or of a POA are:

The Agent must act within the scope of the authority granted by the POA. Restatement (Third) of Agency § 8.09 (2005). An agent’s actions outside the scope of her authority may be voidable. Morton v. Morris, 66 S.W. 94, 98 (Tex. Civ. App. - San Antonio 1901, no writ). In certain circumstances, the Agent may be held personally liable when she exceeds her authority. Albright v. Lay, 474 S.W.2d 287, 291

(Tex. Civ. App. - Corpus Christi 1971, no writ).

The Agent must not engage in self-dealing. In re Estate of Miller, 446 S.W.3d 445, 453 (Tex. App.- Tyler 2014, no pet.). Self-dealing is generally defined by Texas courts as the Agent using the advantage of her position to gain a benefit at the expense of her Principal. Mims-Brown v. Brown, 428 S.W.3d 366, 374 (Tex. App. - Dallas 2014, no pet.). The prohibition on self-dealing can be modified by the Principal, but still generally requires complete disclosure of all material facts plus good faith. Restatement (Third) of Agency § 8.06 (2006).

When Texas courts examine a challenge to an Agent’s self-dealing, they often invoke the rule that all transactions between an agent and his principal are presumptively fraudulent and void; the burden lies on the Agent to establish the validity and fairness of a particular transaction. Jordan v. Lyles, 455 S.W.3d 785, 795 (Tex. App. – Tyler 2015, no pet.).

Some clients are surprised to learn, however, that an Agent may make gifts on behalf of the Principal in certain situations.

Many POA cases involve an elderly parent appointing one of his children or other family as Agent to exercise control over his property and financial affairs. A question that often arises is: How can I tell if my sibling is stealing from my parents or otherwise abusing the POA? The answer to this this question is often complicated. Generally, as a non-party to the POA you may not have rights to information from the Agent (or the Principal for that matter) and may have to look to third party sources, such as public records. The Principal may demand and accounting and other information, but that right does not usually extend to other family members who are not named as Agent.

In our experience, one of the “red flags” of POA abuse by a child is attempted isolation of the parent. If normal communications with and access to the parent change, its is a strong indicator that further investigation is needed.

Another common question is: Can I remove my sibling as Agent under the POA? Although the answer depends on the facts of your particular case, an Agent can be removed and a successor agent can be appointed by a probate court if it finds that:

Tex. Estates Code § 753.001

If the Agent is removed, the court can deny the Agent’s compensation if the Agent was allowed compensation by the POA in the first place. Id. Only certain parties have a right to seek removal of an Agent under a POA. Tex. Estates Code § 751.251

The laws governing a POA in Texas are complex. Consult with an attorney if you think a loved one is being subject to POA abuse.