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Does a power of attorney create a fiduciary relationship between the grantor and the attorney-in-fact?

Posted on Oct 6 2013 9:39PM by Attorney, Jason A. Lee

Under Tennessee law a power of attorney document is available to provide an individual with great powers to handle many aspects of the grantor’s life.  Specifically, T.C.A. § 34-6-109 outlines the powers of a power of attorney under Tennessee law.  Usually this is used when an individual becomes incompetent and lacks mental capacity to make decision for themselves.

 

The recent Tennessee Court of Appeals decision of Tamala Teague v. Garnette Kidd, No. E2011-02363-COA-R3-CV, 2012 WL 5869637 (Tenn.Ct.App. 2012) discussed the relationship between the grantor of a power of attorney and the attorney-in-fact.  The Tennessee Court of Appeals found:

 

The execution and exercise of a power of attorney establishes a fiduciary relationship between the attorney in-fact and the grantor of the power.  The fiduciary is obligated to deal with the property of his (or her) principle in the utmost good faith.  The duties of loyalty and honesty are also a part of a fiduciaries obligation.  In Tennessee, a presumption of undue influence arises when the dominate party in a fiduciary relationship receives a benefit from the other party.  This presumption may be rebutted only by clear and convincing evidence of the fairness of the transaction."

 

Teague at 7.  (Citations omitted).  As a result, when someone is the "attorney-in-fact" as established in a power of attorney document by a grantor, it is very important to consider the fiduciary responsibilities in this relationship.  This is especially true when there is any transaction between the two that benefits the attorney-in-fact.  Tennessee law creates a presumption that in this circumstance when the dominant party (the attorney-in-fact) receives a benefit from the granting party then such a transaction is presumed to be the result of undue influence.  If this occurs, this can be considered a breach of the fiduciary relationship.

 

Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.

TAGS: Durable Power of Attorney for Healthcare, Power of Attorney
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Author

Jason A. Lee is a Member of Burrow Lee, PLLC. Contact Jason at 615-540-1004 or jlee@burrowlee.com for an initial consultation on wills estate planning and probate issues.

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Tennessee Wills and Estates Blog
Jason A. Lee, Member of Burrow Lee, PLLC
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Nashville, TN 37203
Phone: 615-540-1004
E-mail: jlee@burrowlee.com

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