In Uncategorized on 05/18/2017 at 19:54

The right paper in the hands of ex’r Jeff would have saved the day for Estate of Nancy H. Powell, Deceased, Jeffrey J. Powell, Executor, 148 T. C. 18, filed 5/18/17.

But once again, the power of attorney is useless if it fails to empower the agent to do what is needful.

The late Nancy put $10 million in cash and stock into a limited partnership, in which she had a 99% limited partner’s interest. Judge Halpern is down with ex’r Jeff’s position, that the three-year clawback into the late Nancy’s estate is only the difference between the worth of the cash and stock over the worth of what the late Nancy got for the same, namely the 99% limited partner’s interest.

And the clawback does cover that value, because all the partners, limited and general, could elect to terminate the LP and divvy up the goodies, thus qualifying for Section 2036(a)(2) “possess or enjoy” treatment.

But ex’r Jeff hands the late Nancy’s 99% limited partner’s interest to a charitable lead annuity trust a week before the late Nancy departs this vale of tears. For no consideration.

No one says there wasn’t a power of attorney (springing variety, which springs to life when principal is incompetent), or that the late Nancy wasn’t incompetent a week before she died. Two doctors certified the late Nancy was incompetent.

Problem: CA law requires a grant of explicit authority in the POA to permit the making of gifts by the agent.

Ex’r Jeff claims general authority to deal with principal’s property, but that’s a nonstarter.

See my blogpost “Good Job, Judge Lauber,” 10/14/16.

Takeaway- Draft that POA with utmost care. Especially when you’re under time pressure.


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