Court Opinion

ID: 9675831
Source: CourtListenerOpinion
Date Created: 2023-08-24 05:06:50.830055+00
Date Added: 2024-06-11T18:16:40.169439
License: Public Domain

SHIRLEY S. ABRAHAMSON, C.J.
¶ 41. (concurrence). I join the majority opinion but write to put this case in the larger societal and legal context of elder abuse generally and durable powers of attorney and joint accounts more specifically.1
*289¶ 42. With the aging of our population has come an increasing interest in the legal problems of older Americans and an increasing awareness of the exploitation of the elderly. The present case should raise concerns about the specter of financial exploitation.
¶ 43. Traditionally the judicial system has provided protection for an incompetent and has reviewed the activities of a representative to ensure that the incompetent is not exploited. An incompetent may have no one to protect him or her other than the courts. Courts should be cognizant of this traditional function in resolving cases involving durable powers of attorney.
¶ 44. The durable power of attorney is a statutory creature derived from the common law nondurable power of attorney.2 A durable power of attorney, unlike the common law power of attorney, survives the principal's disability or incapacity. In fact, "[djurable powers of attorney are intended to give competent individuals the ability to delegate to an agent broad powers to manage their affairs and assets in the event of incompetency."3 The durable power is a very useful tool for many persons and for many circumstances. The durable power enhances the autonomy of the principal by enabling a principal to make decisions for himself or *290herself while competent that will continue to be effective if the principal becomes incompetent.4
¶ 45. The durable power of attorney can improve the living conditions of the elderly and provide security for their future care.5 A durable power of attorney can help a competent principal to handle his or her financial and legal affairs and living arrangements and can then enable the attorney-in-fact, the agent, to handle the principal's finances and day-to-day quality of life without having to declare the principal incompetent and without having to seek court supervision. These durable powers are drafted to enable the agent to handle a range of matters, including enabling the agent to do everything that the principal could individually do.
¶ 46. As the population ages and as the value of these durable powers of attorney are becoming better known, lawyers and nonlawyers are drafting these durable powers more frequently. A study by the AARP in 2000 found that 45% of Americans age 50 or older reported having executed a durable power of attorney, representing a large increase in the prevalence of durable powers from a decade earlier.6
*291¶ 47. The durable power of attorney has been appropriately characterized as "a simple yet powerful tool."7 But it is at the same time a troublesome document, creating the potential for abuse. By merely signing a durable power of attorney, a principal may give an agent tremendous power, including the power to sell the principal's home and any other assets, to make investments, to cancel insurance policies or name new beneficiaries, and even to empty the bank accounts.
¶ 48. A 1993 national survey of attorneys, social service providers, area aging administrators, district attorneys, and surrogate court judges conducted by the Government Law Center of Albany Law School found that 94% of those surveyed reported having personal knowledge of abuse of a power of attorney. Sixteen percent of those surveyed had encountered abuse 6 to 10 times, and 22 percent had encountered such abuse 10 or more times.8 Most of the litigation involving durable, powers of attorney seems to arise when an agent allegedly makes improper gifts or engages in more broadly-stated "self-dealing."9
¶ 49. Yet the problems involving durable powers of attorney do not arise just from the acts of selfish and conniving agents. Commentators have also expressed concern about the difficulties created by the confusing nature of the fiduciary duty imposed by a durable *292power. As one commentator aptly summarized, "[t]he most serious problem with durable powers is the uncertainty as to the agent's powers."10 Little guidance is given to agents in the statutes or case law, and few guidelines have been clearly established as to the standard agents are to use in making decisions for the principal under the durable power and the extent of their duty to communicate with the principal.
¶ 50. So how is a well-intentioned agent supposed to behave? Assumptions have been made that an agent under a durable power is governed by traditional agency rules, or by rules analogous to those governing guardians and trustees, or by general fiduciary principles.11 Merely to say that the principal is a fiduciary, however, is not sufficient. Many different types of fiduciary relationships exist, and the obligations of the agent vary depending on the specific context of the fiduciary relationship.12
¶ 51. Problems are also specifically posed by the "durable" nature of the durable power of attorney. *293Perhaps when a principal is competent and is aware of the agent's actions one set of fiduciary duties comes into play under a durable power, but a different set of fiduciary duties may govern after the principal becomes incompetent. Having different standards, however, may prove not only difficult but may also be contrary to the goals of the durable power of attorney. The determination of incompetency is complicated and the durable power of attorney is designed to avoid a judicial declaration of incompetency.13
¶ 52. State statutes on durable powers use multiple standards for the agent's decision-making, including fiduciary standards, due care, what the agent finds "desirable or necessary," what the agent finds "useful, necessary or ... reasonable," or what the agent believes is "in the best interests of the principal."14 Wisconsin's statute plainly requires that the agent perform his or her duties "in accordance with the terms of the durable power of attorney executed by the principal." Wis. Stat. § 243.07(6r)(a), (6r)(a)l.
¶ 53. The majority opinion adopts the "intention of the principal" as the standard for testing the agent's decision-making in the present case. An agent is to act according to the principal's wishes. Such a standard may be fine when the principal can supervise the agent. This standard, however, may be subject to abuse when the principal can no longer supervise the agent and cannot testify because he or she is incompetent or deceased.
*294¶ 54. Moreover, this standard may become problematic when the principal's wishes are at odds with the principal's best interests. The principal, for instance, may not want to move into an assisted living facility even though he or she can no longer live alone, or may not want to sell certain assets even though he or she is financially strapped. What is the well-intentioned agent to do, when what is clearly in the principal's best interests is against the principal's intentions?
¶ 55. The lack of clarity of the agent's duties allows greater flexibility in an agent's decision-making process. Yet the lack of clarity may also open the durable power to exploitation and may make it difficult for a court to remedy any misuse of the power, even though courts traditionally , have protected the incompetent.
¶ 56. Various proposals have been suggested that aim to help the principal maintain autonomy, to curb abuse of the durable power, and to retain the advantages of the document. As the durable power of attorney is also used in other common law countries, this area of law may be one in which we can learn from the experiences of other countries, especially England, Australia, and New Zealand.15
¶ 57. Among the proposals for reform of the durable power, one commentator suggests that the agent be required to communicate with the principal and provide advance notification of major transactions.16 Other suggested reforms include requiring more robust practices in the execution of the durable power; focusing on an agent's limited ability to engage in certain *295suspect transactions like gift-giving and self-dealing; appointing a third party to monitor or otherwise increase the ability of third parties to police the durable power of attorney relationship; requiring the agent to register with the court system and provide periodic accountings to the court if and when the principal becomes incompetent; requiring the agent to be bonded; and clarifying the agent's role and reining in the agent's autonomy in order to create a system consistent with traditional agency principles. Levy enhanced civil and criminal penalties on abusers of the durable power.17
¶ 58. State legislatures have started paying attention to these and other concerns. A study conducted by the American Bar Association's Commission on Law and Aging found that in the years 2000-2003, 28 states had engaged in legislative activity relating to durable power of attorney instruments.18
¶ 59. This case illustrates the complexity of the problem and how simple reforms may not work. In the instant case, the principal was an elderly woman who, without benefit of counsel, appointed her adult son as the agent under a standard durable power of attorney form and who later became incompetent. In completing the durable power form, the mother did not explicitly allow her son to make gifts or engage in self-dealing. Nevertheless, because of the circumstances and rela*296tionship, the circuit court (and this court) treat the power of attorney as if it had these provisions.
¶ 60. Further complicating the agency relationship in the present case is that the mother and son had a joint account that predated the execution of the durable power. The joint account contained only the mother's funds but was used before the execution of the durable power for both the mother's and the son's personal needs. The mother's funds continued to be put into the joint account after the durable power was executed and continued to be used for both the mother's and the son's personal needs.
¶ 61. Joint accounts can serve many purposes and take several forms, although the title "joint account" is the same. See Wis. Stat. §§ 705.01(4), 705.02(1). Sometimes only one person knows of or uses the joint account; the account is actually a testamentary device. With other joint accounts, both persons access the account for whatever purposes they wish. Still other joint accounts are accounts of convenience; the funds belong to the depositor of the funds and the other person accesses the account for the benefit of the owner of the funds, such as to pay the owner's bills.
¶ 62. Cases have arisen concerning whether the incompetency of one of the joint tenants terminates the joint account.19 As the majority opinion makes clear, the present case concerns the intersection of the rules *297governing durable powers of attorney and the rules governing joint accounts. This case illustrates that the durable power of attorney implicates other areas of the law, and any reform must be mindful of these other legal issues.
¶ 63. The circuit court considered all the evidence and concluded that the son's use of the joint account was authorized by the mother despite the text of the durable power of attorney. This court reviewing the findings of the circuit court concludes that the son's use of the joint account comports with the mother's intention. I join the majority opinion in the present case but conclude that a court must approach a case involving an incompetent with the "presumption" that a primary function of the court is to protect the incompetent.
¶ 64. There are significant issues bubbling and brewing just below the surface of today's decision that need to be addressed. Courts have not had the opportunity to define the role of an agent under a durable power of attorney sufficiently because litigation is too infrequent and too fact-specific. Legislative study of the use and abuse of durable powers of attorney may be called for. See Wis. Stat. § 13.83(1) (Law Revision Committee). The legislature should consider formulating guideposts to govern the fiduciary responsibilities of an agent so that agents can operate efficiently on behalf of the principal under a durable power, while the principal is protected from abuse of the power and unnecessary court interventions and government intrusions are prevented. Any reform of the durable power of attorney must preserve and foster the instrument's usefulness.
¶ 65. For the reasons set forth, I write separately.
*298¶ 66. I am authorized to state that Justice ANN WALSH BRADLEY joins this opinion.

 I have consulted and relied on the following articles in writing this concurrence but, at points, have avoided citing one or more of these resources for some of the ideas set forth herein. These scholarly commentaries have proven to be insightful and those interested in further discussion should turn to them. See Carolyn L. Dessin, Financial Abuse of the Elderly: Is the Solution a Problem, 34 McGeorge L. Rev. 267 (2003) [hereinafter Dessin, Financial Abuse]; Nina A. Kohn, Elderly Empowerment as a Strategy for Curbing the Hidden Abuses of Durable Powers of Attorney, 59 Rutgers L. Rev. 1 (2006); Hans A. Lapping, License to Steal: Implied Gift-Giving Authority and Powers of Attorney, 4 Elder L. J. 143 (1996); Karen E. Boxx, The Durable Powers of Attorney's Place in the Family of Fiduciary Relationships, 36 Ga. L. Rev. 1 (2001); Carolyn L. Dessin, Acting as Agent under a Financial Durable Power of Attorney: Am Unscripted Role, 75 Neb. L. Rev. 574 (1996) [hereinafter Dessin, Acting as Agent]; *289William M. McGovern, Jr., Trusts, Custodianships, and Durable Powers of Attorney, 27 Real Prop. Prob. & Tr. J. 1 (1992-93).

 Wis. Stat. §§243.07-243.10. See also Uniform Durable Power of Attorney Act, 8A U.L.A. 275 (2003).

 Knight v. Milwaukee County, 2002 WI 27, ¶ 27, 251 Wis. 2d 10, 640 N.W.2d 773 (internal citations omitted) (also explaining that "the agent under a durable power of attorney has been characterized as the 'alter ego' of the principal").

 The drafters of the Uniform Durable Power of Attorney Act explained its purpose as "to assist persons interested in establishing non-court regimes for the management of their affairs in the event of later incompetence or disability." See Knight, 251 Wis. 2d 10, ¶ 29.

 The durable power of attorney is not intended only for the benefit of the elderly. It is a useful planning tool for persons of all ages; disability and incapacity unfortunately can happen to anyone at any age.

 Nina A. Kohn, Elderly Empowerment as a Strategy for Curbing the Hidden Abuses of Durable Powers of Attorney, 59 Rutgers L. Rev. 1 (2006) (citations omitted).

 Lapping, supra note 1, at 167.

 Id. at 167-68 (citation omitted). Professor Boxx, however, states that abuse of the durable power document is rare. Boxx, supra note 1, at 2 (citation omitted). For discussions of the incidence of financial exploitation of the elderly, see, e.g., McGovern, supra note 1, at 13; Dessin, Acting as Agent, supra note 1, at 575-76, 584; Dessin, Financial Abuse, supra note 1, at 280-81.

 Dessin, Acting as Agent, supra note 1, at 612-14 (1996).

 McGovern, supra note 1, at 32. See also Boxx, supra note 1, at 42 (agent's predicament is to carry out "unscripted" duties in "confusing climate of amorphous fiduciary principles and the even less-defined role of an attorney-in-fact").

 Dessin, Acting as Agent, supra note 1, at 584-85.
The Restatement (Third) of Agency explains that
The relationship created by a durable power resembles agency because it is a mechanism to enable the legal consequences of one person's acts to be attributed to another person. In other respects, the relationship at this point resembles a trust in which the power holder is similar to a trustee because the person acting is not under the control of the person for whom the actor's conduct has consequences and on whose behalf the actor has a duty to act.
1 Restatement (Third) Agency, Introduction, at 10 (2006).

 Kohn, supra note 1, at 13 (citations omitted).

 Boxx, supra note 1, at 42-43, 50-51; Dessin, Acting as Agent, supra note 1, at 607-08, 610.

 Kohn, supra note 1, at 13-15 (citations omitted); Boxx, supra note 1, at 47-48.

 Kohn, supra note 1, at 21-22 (citations omitted); McGovern, supra note 1, at 37-38.

 Kohn, supra note 1 (passim).

 Id. at 33-36 (citations omitted); Dessin, Financial Abuse, supra note 1, at 280-320 (discussing various statutory attempts to address, remedy and punish financial abuse of the elderly); Boxx, supra note 1, at 44-48, 55 (discussing statutory attempts to address the lack of supervision of agents and to define agents' duties).

 Kohn, supra note 1, at 33.

 For discussions of jointly held bank accounts, see Robert D. Williams, Note, When Is Separate Property, Which is Placed into a Jointly Held Bank Account, Transmuted? The Approach Taken in Wisconsin: Lloyd v. Lloyd, 487 N.W.2d 647 (Wis. Ct. App. 1992), review denied, 494 N.W.2d 210 (Wis. 1992), 29 Idaho L. Rev. 1060 (1992-93) (relating to marital property); Bruno W. Tabis, Jr., Note, Illinois Conservator's Right to Invade Joint Savings Account, 48 Chi.-Kent L. Rev. 230 (1971); William J. *297Rohrbach, Jr., Note, Contracts — Incompetency and the Joint and Survivorship Bank Account, 24 Baylor L. Rev. 397 (1972).