In March 2014, Barbara Ann Morris executed an estate plan that designated her daughters, Karen Wyman and Pamala Bruckner, as the beneficiaries and Wyman as the personal representative of her estate. The power of attorney read, in relevant part:
Not to limit the full extent of the power and authority herein granted but merely to emphasize certain powers, said attorney-in-fact shall have full, unrestricted, power and authority as follows:
To handle, manage, lease, sell, purchase, convey, exchange, give or receive as a gift, loan, encumber, possess, use, consume, abandon or otherwise deal in or with, in any manner, all or any portion of my real or personal property, including any interest I may have therein, whether now owned or hereafter acquired, whatsoever and wheresoever located….
Shortly thereafter, Morris signed a power of attorney naming Bruckner as her attorney in fact. Morris then opened a pay-on-death account at Dakotaland Credit Union, designating Wyman and Bruckner as beneficiaries. But in December 2014, Morris and Bruckner signed a form to make Bruckner joint owner of the account. Between January 2015 and Morris’s death in March 2015, Bruckner wrote several checks to her husband, her son-in-law, and herself, totaling \($225,000.\) Wyman sued Bruckner, alleging that the power of attorney did not authorize self-dealing, and thus, Bruckner had breached her fiduciary duties. The circuit court ruled that the power of attorney authorized Bruckner to “give or receive as a gift” Morris’s property, and thus she did not self-deal. Wyman appealed.
JUSTICE KERN Wyman contends that because the power of attorney did not clearly and unmistakably authorize Bruckner to self-deal, Bruckner violated her fiduciary duties when she transferred \($6,377.16\) out of the Dakotaland account to herself and \($218,700\) to family members. Bruckner counters that the power of attorney expressly gave Bruckner unrestricted authority to make gifts to herself and her family members, and that this Court has never required “magic language”
permitting self-dealing.
We have resolutely held that “a power of attorney must be strictly construed and strictly pursued.” “Only those powers specified in the document are granted to the attorney-in-fact.” Moreover, “a fiduciary must act with utmost good faith and avoid any act of self-dealing.” “In order for self-dealing to be authorized, the instrument creating the fiduciary duty must provide ‘clear and unmistakable language’ authorizing self-dealing acts.” (emphasis added) “Thus, if the power to self-deal is not specifically articulated in the power of attorney, that power does not exist.” (emphasis added)
Here, the power of attorney authorized Bruckner to “give or receive as a gift … or otherwise deal in or with, in any manner, all or any portion of my real or personal property, including any interest I may have therein, whether now owned or hereafter acquired, whatsoever and wheresoever located[.]” Wyman argues that finding authorization to self-deal in the language “receive as a gift” is contrary to our settled law and would set a dangerous precedent. We agree.
This Court strictly interprets the power of attorney, giving effect only to those powers explicitly provided for. We have precluded self-dealing even when the language of a power of attorney might logically entail the ability to self-deal. Bruckner correctly argues that we have never held that a power of attorney must include “magic language” to authorize self-dealing. But the language of this power of attorney provides an even less obvious authorization to self-deal than the language purported to do so in Bienash or Studt. While a strained reading could support an argument that the power of attorney authorized Bruckner to gift Morris’s money to herself, we cannot say there is “clear and unmistakable language” authorizing self-dealing acts.
Wyman also argues that the power of attorney does not authorize Bruckner’s transfers to family members. Self-dealing occurs when an agent pits their personal interests against their obligations to the principal. Here, Bruckner gifted money from the account to her family while Morris was still alive and the owner of all of the funds in the account. The power of attorney does not clearly authorize transfers of the principal’s property to family members. If we allow a fiduciary to “feather his or her own nest,” then the power to do so must be expressly provided for. The power of attorney authorizes Bruckner to “give” any or all of Morris’s property, but the power of attorney does not clearly permit self-dealing either with respect to Bruckner herself or her family members.
With respect to the money withdrawn from the Dakotaland account during Morris’s lifetime, because Bruckner engaged in impermissible self-dealing, we hold that the funds should be returned to the estate and distributed according to Morris’s estate plan.
CRITICAL THINKING:
What specific language could have been inserted into the writing creating the power of attorney in this case that would have altered the court’s decision with respect to the legality of the self-dealing?
ETHICAL DECISION MAKING:
What is the purpose of creating rules surrounding the extent of power of attorney? Who are the stakeholders that are affected by the conflicts that arise between principal-agent relationships in power-of-attorney cases?