Penelope has always been the one in the family who Aunt Phoebe calls on when she needs help. For the past four years, Penelope has given generously of her time to take Aunt Phoebe to her numerous doctors’ appointments, pick up her prescriptions and even take her laundry to the cleaners. Until recently, she hasn’t considered this a burden. However, as Aunt Phoebe has become incapable of handling her own affairs and her needs have increased, she has called on Penelope daily for some errand or chore. The past year, Penelope has spent approximately twenty hours a week assisting with Aunt Phoebe’s care. Aunt Phoebe is sufficiently affluent to hire someone to take care of these tasks. If she were paying someone to do them, she would have spent around $400.00 a week or $20,800 for the past year alone.

Penelope’s brother, Thomas, under authority of Aunt Phoebe’s power of attorney, handles all her financial affairs. Thomas has also been named as executor of her estate. Aunt Phoebe has made specific bequests to Penelope and Thomas of $5,000.00 each. In Aunt Phoebe’s mind this is a large amount of money. She keeps telling Penelope that she appreciates all she is doing, but that she has taken care of her in her will.  Unfortunately, it is clear that Aunt Phoebe’s bequest will not have come close to repaying Penelope. To make matters worse, Aunt Phoebe is no longer competent to change her power of attorney or make a new will.

What planning steps before Aunt Phoebe became incompetent could have prevented this injustice? Is there anything that could be done to rectify the situation as it stands?

The state of affairs outlined above could have been prevented by including in the power of attorney a grant of power to give reasonable compensation to any person who requests it for volunteer services of any kind when otherwise those services would have had to be purchased from a person or entity providing them. Had that power been included in Aunt Phoebe’s power of attorney, Penelope could have kept a record of the services she has provided and presented this to Thomas for payment at the going rate. Thomas would then have been able to pay Penelope from Aunt Phoebe’s funds.

Since the power of attorney ceases the moment that principal dies, even if Thomas had been given the authority to pay Penelope under the power of attorney, he would have no authority to pay her for services that had not yet been presented or paid before Aunt Phoebe died.

Proper planning could anticipate that potential circumstance by giving the executor under the will power to make the payment. This could be done in various ways. For instance, the will might give the executor the discretion to increase the specific bequest of $5,000.00 to an amount that compensated Penelope for her assistance. Or the will might grant the executor the authority to give reasonable compensation in the exact manner or similar manner as did the authority under the power of attorney.

The executor of a will is charged with the duty of accepting or rejecting claims of creditors made to the estate. The accepted claims become debts of the estate that the executor must pay before the bequests under the will are satisfied.

If Penelope has documented the services she has provided and the time invested in providing them, she can present her claim to Thomas as executor and he can pay her from the assets of the estate. 

           

Sandra W. Reed is an attorney with Katten & Benson, an Elder Law firm in Fort Worth. She lives in beautiful Somervell County, near Chalk Mountain.