Written by Jeffrey Skatoff • November 27th, 2010
Powers of attorney create enormous temptations for the power-holder to alter the principal's estate plan through the retitling of assets. In Beane v. Suntrust Banks, ___ So.3d ___ (Fla. 4th DCA November 10, 2010), a power-of-attorney holder did just that. The deceased had funds in Suntrust Bank in a Totten trust account, which named Frances Wallin as the beneficiary of the account, to be paid upon the deceased's passing. The deceased gave a general power of attorney to Deborah Lorenzo. The next day, Lorenzo withdrew all of the money from the Suntrust account, placing all of the money in a different account, in the name of a relative of Lorenzo.
After the passing of the deceased, the personal representative of her estate sued Suntrust for the value of the money in the account prior to Lorenzo's actions, alleging that the activity engaged in by Lorenzo was improper, and that Suntrust should not have allowed the improper transaction to have taken place. The personal representative relied primarily on Florida's power of attorney statute, which provides (Florida Statute Section 709.08(7)(b)):
an attorney in-fact may not "create, amend, modify, or revoke any document or other disposition effective at the principal's death or transfer assets to an existing trust created by the principal unless expressly authorized by the power of attorney."
The personal representative argued that the removing the funds from the Totten trust and placing the funds into another account in the name of another is a disposition effective at death, hoping to create liability on Suntrust for allowing the transaction to take place.
The Court disagreed. Because the owner of the Totten trust retained the unfettered ability to withdraw any or all of the funds, the attorney-in-fact retained the same authority as a result of the power of attorney. Because an owner of a Totten trust can withdraw from the account without constraint, the prospective Totten trust beneficiary cannot object to the depositor's withdrawal from the Totten trust.
The result makes a great deal of sense - no bank should be held liable when a power-of attorney holder simply removes funds from a bank account. The opinion does not address what liability the power-of-attorney holder and the recipient of the funds may have. Even though the power-of-attorney holder may have had the legal power to engage in the subject transaction, such transaction may have been a violation of her fiduciary duty that is owed to the principal (Florida Statute Section 709.08(8)):
Standard of Care - Except as otherwise provided in paragraph (4)(e), an attorney in fact is a fiduciary who must observe the standards of care applicable to trustees as described in Section 736.0901.