Category Archives: Trust and Estates

Your attorney-in-fact only has the financial authority you grant him in the document creating a durable power of attorney for finances. Generally, an attorney-in-fact has broad authority to:

1. use your assets to pay your everyday expenses and those of your family
2. handle transactions with financial institutions
3. buy, sell, maintain, and mortgage property
4. file and pay your taxes
5. manage your retirement accounts
6. collect benefits from government programs or civil or military service

Beyond routine financial matters, you may want to authorize your attorney-in-fact to:

1. invest your money in securities
2. buy and sell insurance policies and annuities for you
3. operate your small business
4. claim or disclaim property you get from others
5. represent you in court

An attorney-in-fact cannot:

1. make healthcare decisions for you
2. marry on your behalf
3. adopt for you
4. vote in public elections on your behalf
5. make a will for you

The attorney-in-fact you appoint in your durable power of attorney is known as a “fiduciary,” which is someone who holds a position of trust and must act in your best interests. Thus, your attorney-in-fact is required to:

1. be careful with your property by handling it honestly and prudently
2. avoid conflicts of interest
3. keep your property completely separate from her own
4. keep adequate records for all transactions made on your behalf

An attorney-in-fact is not directly supervised by a court and, as such, is not required to file reports with any government agencies. However, a loved one who has doubts about the attorney-in-fact may ask a court to order the attorney-in-fact to take certain actions or ask a court to terminate the power of attorney-in-fact and appoint a conservator to supervise your affairs. If a conservator is appointed for you, the attorney-in-fact has to account to the conservator. Some states have statutes that set out specific procedures for such court actions.

Suppose that an intestate is survived by three children and no grandchildren. Who inherits the intestate’s net estate? How much does each person get? For most people, the answer is easy and obvious. Each child takes one-third of the intestate’s net estate.

Now suppose that an intestate is survived by two grandchildren who are children of the eldest child, who has not survived, and by the two younger children of the intestate. Who inherits the intestate’s net estate? How much does each person get? The answer is no longer easy and obvious.

One view is that because the eldest child has not survived, the two grandchildren should take nothing, and that the two younger children should each take one-half of the intestate’s net estate. Another view is that the two grandchildren should take by representation the one-third share of the intestate’s net estate that the eldest child would have taken if the eldest child had survived. Under this view, the two younger children should each take one-third of the intestate’s net estate, and the two grandchildren should each take one-sixth of the intestate’s net estate. The first view is an example of per capita. The second view is an example of per stirpes (pronounced: per-STIR-peas).

Per Capita

Per capita is a Latin phrase that means “by the heads” or equally. With per capita, property is divided in equal shares among those who are in an equal degree of consanguinity (relationship by blood) to the intestate. Originally, most descent and distribution was per capita.

Per Stirpes

Over time, many courts and legislatures have found that the result of per capita, in which orphaned children take nothing, too harsh. Those courts and legislatures have embraced per stirpes. Per stirpes is a Latin phrase that means “by roots or stocks” or by representation. With per stirpes, property is divided in equal shares among those who are in an equal degree of consanguinity to the intestate, with descendants of a deceased ancestor taking the ancestor’s share by representation, as if the ancestor had survived the intestate.

Per stirpes originally applied only to grandchildren taking a child’s share by representation. Today, many states apply per stirpes, however remote the nearest relative is to the intestate. The application of per stirpes to remote relatives is technically known as modified per stirpes.

How the Statute of Descent and Distribution is Interpreted in Your State

In some states, per capita applies in some circumstances and per stirpes applies in other circumstances. When an intestate dies, everything depends on the exact wording and interpretation of the statute of descent and distribution in your state. Your lawyer can advise you. Furthermore, when making a gift to a class of persons in a will or other estate plan, it is a good idea, for the sake of clarity, to specify whether you intend per capita or per stirpes.

When a person dies intestate (without making and leaving a will), each state provides a default plan (usually known as the statute of descent and distribution), under which his or her net estate is disposed. When a person dies intestate, there is no changing the default plan. The default plan’s sequences for determining who inherits and how much cannot be changed. This article discusses the disadvantages of descent and distribution related to that inability to change who inherits and how much.

Division of the Estate

Under descent and distribution, a person who wants to plan the disposition of his or her estate cannot have any item of property transferred separately from the rest of his or her property to any particular person or group. For example, a person cannot leave a particularly sentimental item of property, such as a wedding ring, to a particular person apart from the rest of his or her property. Moreover, a person cannot give joint ownership of his or her property to a group of people.

Who Inherits

Under descent and distribution, a person who wants to plan the disposition of his or her estate cannot disinherit an expectant heir or prospective heir or disinherit a spouse to the extent permitted by law.

Under descent and distribution, a person who wants to plan the disposition of his or her estate cannot favor one person in the same class over another. For example, a parent who has four children, three of whom have been blessed with good fortune and one of whom has not, cannot favor the unfortunate child over the fortunate children. Similarly, a person cannot transfer his or her property to both a child and the child’s children at the same time.

In short, under descent and distribution, a person who wants to plan the disposition of his or her estate cannot transfer property to his or her “family” as he or she defines the term “family.”

How Much Is Inherited

Under descent and distribution, a person who wants to plan the disposition of his or her estate cannot establish exactly how much is inherited by each heir. He or she also cannot index the amount inherited to some other measure, such as the heir’s age or youthfulness.

Some of the Advantages of Making a Will

All of the disadvantages of descent and distribution related to the inability to change who inherits and how much can be overcome by making a will. To overcome the disadvantages of descent and distribution, have your lawyer prepare a will (and any other estate planning documents) for you.