Texas courts recognize that a person with a power of attorney owes the principal (the person who gave the power of attorney) a fiduciary duty. The holder of the power of attorney owes her principal a high duty of good faith, fair dealing, honest performance, and strict accountability. When the fiduciary receives an alleged gift from the principal, the fiduciary has an extremely high burden to show that the gift was in the best interest of the principal. The courts have observed that the fiduciary relationship cast upon the profiting fiduciary the burden of showing the fairness of the transactions. By accepting both the role of fiduciary and gifts from the principal, the agent consents to have her conduct measured by a higher standard of loyalty.In one case, the fiduciary never acted under her power of attorney. Therefore, she claimed, she did not have to meet the high burden of a fiduciary to prove that the gifts she received from the principal were in the best interest of the principal. The court rejected these arguments. The court found that the holder of the power of attorney owed the principal a fiduciary duty based solely on the power of attorney whether or not it was ever exercised. This finding placed the burden on the holder to prove the transfer of the principal’s property to her was fair and in the best interest of the principal.
The violation of the duty that a holder of a power of attorney owes to the principal can result in a felony conviction. In one case, the facts were as follows: “Grace added Tyler as a signatory on her bank accounts, and executed a durable power of attorney naming Tyler as her “agent (attorney-in-fact).” The power of attorney gave Tyler power over all of Grace’s assets.” Tyler later misapplied the funds under her control by using some for her personal debts.
The criminal law in question, §32.45 of the Texas Penal Code says: “A person commits an offense if he intentionally, knowingly, or recklessly misapplies property he holds as a fiduciary or property of a financial institution in a manner that involves substantial risk of loss to the owner of the property or to a person for whose benefit the property is held.” Tyler claimed that she had no formal trustee relationship with Grace, and therefore a fiduciary relationship “may not have” existed. In ruling that the existence of the power of attorney alone created the fiduciary relationship, the court upheld her conviction.
Update: In a 2018 case, an appeals court upheld a decision that the person with a power of attorney breached his fiduciary duty when he withdrew funds from a bank account and put the funds in his own account. The court ruled that he converted the funds and had to return them. Conversion is the wrongful exercise of dominion and control over another’s property in denial of or inconsistent with one’s rights. “From the evidence, the trial court could have reasonably concluded that when (POA) withdrew the money from the joint account, (POA) was not acting in (principal’s) interests but was using the power of attorney to wrongfully exercise dominion and control over the money to the exclusion of, or inconsistent with, (the owner’s) rights.” No. 02-17-00138-CV. In 2019, the courts held that a person with a power of attorney who had the bank issue him a certified check that he put in his own account, breached his fiduciary duty. This was true even though the person from whom he had the power of attorney signed the check. 02-17-00138-CV.
Filing an inheritance dispute in the wrong Texas court can be fatal to your claim!
Facts
A recent court of appeals decision illustrates what happens when you file an inheritance dispute in the Wrong Texas Court. An elderly Texas man had nine children. In the last few years of his life, one of his children gained control of the man. She obtained a power of (more…)
A power of attorney in Texas creates a fiduciary duty between the person who holds the power (agent) and the person who gives it (principal.) The agent owes his principal a high duty of good faith, fair dealing, honest performance, and strict accountability. A 2015 case out of Fort Worth dealt with the issue of breaching a fiduciary duty in Texas.
Deed
A man (agent) had his aunt (principal) give him a power of attorney. About a year before the aunt died, the nephew executed deeds to the aunt’s real estate to himself and his son. After the aunt died, a probate was filed. When the beneficiaries of the aunt found out about the deeds, they were understandably upset.
Family Settlement Agreement
Apparently, most of the beneficiaries did not have the money to sue the agent so they entered into a family settlement agreementto give one of the beneficiaries the right to sue the agent for breaching a fiduciary duty in Texas. A suit was filed and (more…)
Undue influence is one of the harder things to provein an inheritance dispute. The doctrine of undue influence derives from English courts. A will contest heard by Sir Francis Bacon as the Lord Chancellor of England in 1617 illustrates common aspects of the process of undue influence which emerged in the context of a will contest. These aspects include frail health, physical dependency, false affection, relationship poisoning, threats and mistreatment, and involvement in the execution of documents by and in favor of the alleged abuser.
Relationship poisoning and undue influence.
What is relationship poisoning in the context of a will contest? A Texas court held that when a person makes negative remarks about a person’s children and reinterprets historical events in a negative manner, the jury can consider these acts as relationship poisoning. Based on the relationship poisoning, the jury can find undue influence and the verdict will be upheld. 340 SW 3d 769. While relationship poisoning alone may or may not be sufficient proof of undue influence, if it has occurred it needs to be brought to the attention of the court because it will assist the court in determining if undue influence has occurred.
In 2005 the Texarkana Court of Appeals was asked that question. An elderly couple who became concerned about their future health and living care needs made two of their children signatories on their bank account. Over time, the mother died and a daughter was able to get sole control of the funds. She refused to give her father access to the account. The father filed suit. The daughter responded to the suit by saying that after the mother had died her brother started making large withdrawals from the fund. To protect the money, the daughter took the money out of the account and opened a new account where she was the only signatory. Her position was that the parents had orally created a trust when they put her on the account originally and she was just following the dictates of the trust. She also claimed that once her mother had died, the trust became irrevocable and her father could not revoke it. The trial court agreed with the daughter and held that the parents had created an oral trust when they put the daughter on the account and she had every right to protect their interest by taking the money out of that account and putting it in another one where she was the sole signatory on the account. The father appealed.
The appeals court reversed. They explained that a trust must be in writing. There are some exceptions to that rule but none of those exceptions were present in this case. Since there was no trust, the funds belonged to the father and not to the alleged trust. The court also held that if any trust was created, it was a revocable trust and the father could and did revoked the alleged trust by filing suit. The trial court was reversed and the appeals court sent the case back to the trial court to determine how much attorney’s fees should be awarded against the daughter. 167 sw3 924.
Copyright by Robert Ray a Texas inheritance attorney. The foregoing information is general in nature and does not apply to every fact situation. If you are concerned about inheritance laws, inheritance rights, have a family inheritance dispute, a property dispute or want information about contesting a will and need an inheritance lawyer, we can help. Please go to our main site www.texasinheritance.com and use the contact form to contact us today. We are Texas inheritance lawyers and would love to learn about your case and there is no fee for the initial consultation.
