A common question often arises among many families. Will the executor of a loved one’s estate be able to “re-write” the will or otherwise control the estate to benefit the executor over others?
Similarly, people (principals) may name one or more other people (agents) in a power of attorney to make financial decisions while the principal is alive. Should people other than the agent worry that the agent will abuse that role?
The concern most often arises in multi-children families, where one child is the agent or executor without the other children.
Let us start with the agent under a power of attorney. Powers of attorney allow agents (such as children) to make financial decisions for principals (such as parents), while the parent is alive. The law is clear that an agent acting under a power of attorney cannot disproportionately benefit the agent over others, unless that is the express wish of the parent/principal.
In fact, agents are entirely precluded from gifting principals’ assets unless the power to gift is specifically stated in the POA. Further, even if the power to gift is included in the POA, any gift of the principal’s assets to anyone else must be consistent with the principal’s wishes and cannot exceed gifts of about $15,000 per recipient per year.
Even if the POA specifically includes words that empower an agent to give more than $15,000 to any one person in any year, the agent’s gifts must be consistent with the principal’s wishes. In other words, if a parent wants his or her kids to be treated equally financially, that parent’s agent is legally required to gift equally to the parent’s children, presuming the power to gift in any amount is specifically granted in the POA.
Similarly, when a person passes away, someone else who is living must act as executor (or administrator, if there is no will) of the deceased person’s estate. The duties of the executor include paying bills and taxes and then distributing the deceased person’s assets consistent with the deceased person’s will or Ohio law.
Being an executor is designed to be an administrative task. In other words, in almost every situation, the executor has little to no discretion whatsoever. The executor is simply the arms and legs for the deceased person who cannot make asset distributions himself or herself due to having died.
Most executors will admit that being an executor of an estate is simply cumbersome — not empowering. An executor’s actions are all undertaken under the watchful eye of the local probate court, which independently ensures that the executor does not favor the executor over anyone else.
Nonetheless, some family members may be concerned that the named agent (in a power of attorney) or executor (in a will) is simply closer to the parent while the parent is alive such that the parent literally writes the POA or will to favor that one child. In these circumstances, intentionally disparate treatment by parents is allowed because the law only stops children as agents and executors from deviating from parents’ wishes.
Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.