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Jewish World Review Jan. 17, 2005 /7 Shevat, 5765

Jan L. Warner & Jan Collins

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Consumer Reports

Can I be paid from my uncle's cash? | Q: I am serving as my uncle's agent under his power of attorney. I have been handling his financial and health matters since his health began failing early last year and he was admitted to a nursing home. He is 87, never married, has no children, and my two sisters and I are his closest living relatives. He was my deceased mother's only sibling. He chose me to act for him because we were always close, and I live nearby. My sisters live across the country and have very little contact with him.

He owns a home, a brokerage account, two annuities, an IRA and a bank account, which together is worth nearly $1 million. He has enough income from retirements and Social Security to pay for his care each month in the nursing home, so his assets should be intact to be divided when he dies. His will directs that, at his death, all of his assets should be divided among my sisters and I equally. Before he became ill, my uncle made me a joint account holder on his brokerage account, where most of his assets are held ($500,000). My sisters and I are equal beneficiaries of his IRA and annuities.

Here are my questions: As I read it, the power of attorney says that I can take payments for services I perform for my uncle and can reimburse myself for expenses. While I don't want to sound greedy, I have been taking care of everything for him for more than a year. Can I take retroactive payments? If so, how much could I take? And how will this equal division take place at his death if I get the brokerage account?

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A: First, as to the "equal division": Based on what you described, you and your sisters will equally share in the proceeds from the IRA and annuities, which are "non-probate" assets, meaning that ownership passes according to beneficiary designation, not according to your uncle's will. Assuming the bank account is titled solely in your uncle's name, it, along with the real estate, will pass equally to you and your sisters according to his will because these are "probate assets" — that is, they pass under the terms of a will.

How the brokerage account passes depends on your uncle's intent, which depends on the circumstances. If he made you a joint account owner with the intent that the account would pass to you at his death, it could well be yours alone; however, if he added your name as an accommodation to assist him in financial management during his life, then this account would pass under his will.

Since your uncle's intent, based on his will, appears to be very clear, and given the fact that the brokerage account is his largest asset, it's difficult to believe that he had your name placed on that account for other than financial management purposes. It would also appear to us that had your uncle intended for you to have this large account to the exclusion of your siblings, he would have made reference to this fact or included a provision in his power of attorney that allowed you to make gifts to yourself, which obviously, he did not. That said, if you choose to frustrate his desire to divide his assets equally under these facts, a judge may or may not rule in your favor, but we believe you may well find yourself facing litigation should you claim this account.

As to self-payment: While we understand that it's time-consuming to care for the elderly, you have taken on a fiduciary responsibility for your uncle that, according to you, is based on your close relationship. To pay yourself for your time will result in taxable income to you, not to mention probable scrutiny by your sisters after the fact. We don't know if a family squabble with your siblings is worth the risk you would be taking, but you are certainly a better judge of that than we are.

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JAN L. WARNER received his A.B. and J.D. degrees from the University of South Carolina and earned a Master of Legal Letters (L.L.M.) in Taxation from the Emory University School of Law in Atlanta, Georgia. He is a frequent lecturer at legal education and public information programs throughout the United States. His articles have been published in national and state legal publications. Jan Collins began co-authoring Flying SoloŽ in 1989. She has more than 27 years of experience as a journalist, writer, and editor. To comment or ask a question, please click here.


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© 2004, Jan Warner