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Money November 2017

Legal Ease

Why Lack of Proper Planning Can Be Devastating

By Jonathan J. David

Why would I need to get the court involved when I have the right to conduct all banking on his behalf under the power of attorney? I assume the bank is wrong, but what can I do, am I at their mercy?

Dear Jonathan: My father passed away last month. In addition to being his caretaker for the past five years of his life, I also handled all of his finances as his agent under his financial durable power of attorney. After he passed away, I went to his bank and tried to close out his accounts for the purpose of transferring the money to myself and my sister, who are his only children and the beneficiaries named in his will. The bank, however, refused to give me access to those accounts. The person I spoke with said I had to get some kind of probate court order giving me authority to do this. Why would I need to get the court involved when I have the right to conduct all banking on his behalf under the power of attorney? I assume the bank is wrong, but what can I do, am I at their mercy?

Jonathan Says: Actually the bank is right in this instance. A financial durable power of attorney is only effective during the principal’s lifetime. Once the principal dies, the power of attorney in a sense dies with him. Consequently, while your father was alive, you had full authority to act on his behalf under his financial durable power of attorney, but once he died, that power of attorney became null and void, and no longer had any effect.

Because the bank officer you spoke with told you that you would need to get a probate court order to access those bank accounts, I have to assume that those bank accounts were titled in your father’s name alone. Any time a person dies owning assets in their name alone, those assets need to be probated before they can pass to the beneficiaries named in the will. If your father’s bank accounts were in his name alone, then a probate estate will need to be opened on his behalf and a personal representative (“executor”) will need to be appointed. Once that appointment takes place, that individual will have the authority to access your father’s bank accounts and conduct the administration of your father’s estate.

I recommend that you contact a probate attorney for the purpose of explaining to you and your sister what is involved in probating an estate, as well as the duties and responsibilities of the appointed personal representative. That attorney can also assist you in preparing the necessary paperwork to open a probate estate on behalf of your father. Good luck.

 

Dear Jonathan: I moved in with my mother after my father passed away several years ago. About a year ago she told me that she was going to make out a will leaving her entire estate, including her home, to me. Although I have two brothers and a sister, my mother didn’t want to leave them anything because she had a falling out with them many years ago. After Mom passed away, I received a letter from a lawyer stating that a probate estate was being opened on my mother’s behalf. In the letter the lawyer stated that since there was no will, her heirs, which were her children, were to share and share alike in her estate. I was obviously very upset when I received this information because this was obviously not my mother’s intention that I share her estate with my siblings. Is there anything I can do?

Jonathan Says: If in fact your mother failed to prepare a will, then unfortunately, no. By failing to make a will, your mother gave up any control as to how her estate was to be divided and as a result, you and your siblings, being her heirs, will share equally in her estate regardless of what your mother intended. Your mother could have avoided this and protected you by preparing a will naming you as the sole beneficiary of her estate. I am sorry to be the bearer of bad news.

 

Jonathan J. David is a shareholder in the law firm of Foster, Swift, Collins & Smith, PC, 1700 East Beltline, N.E., Grand Rapids, Michigan 49525.

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