RESTRAINING THE UNSUPERVISED FIDUCIARY.

• Author: Simmons, Thomas E.

1. Introduction 209 II. Discussion 219 A. A Short History of Durability in the Uniform Laws Context 219 1. Model Special POA for Small Property Interests Act (1964) 220 2. UPC chapter 5 (1969) 221 3. UDPOAA (1979) 222 4. USFPOAA (1984) 223 5. UPOAA (2006) 225 B. Legislative History in South Dakota 226 C. Brief Overview of the Uniform Act 228 1. Cold Powers, Hot Powers, and Side Dish Powers 228 2. Gift Powers 230 3. Certain Key Provisions 232 D. Deviations from Uniformity 234 E. Precedent Reconsidered 243 1. Ward v. Lang (S.D. 1996) 244 2. In re Guardianship of Blare (S.D. 1999) 247 3. In re Estate of Stevenson (S.D. 2000) 248 4. In re Discipline of Mattson (S.D. 2002) 250 5. Bienash v. Moller (S.D. 2006) 251 6. Studt v. Black Hills Federal Credit Union (S.D. 2015) 254 7. Hein v. Zoss (S.D. 2016) 255 8. Estate of Bronson (S.D. 2016) 258 9. Wyman v. Bruckner (S.D. 2018) 260 10. Estate of Stoebner v. Huether (S.D. 2019) 261 F. Precedent Reassessed 262 1. General Grants of Authority 263 2. The Power to Make Gifts 264 3. Self-Dealing 266 III. Conclusion 269 IV. Appendix: Gift Power Drafting Options 270 In 2020, Governor Kristi Noem signed South Dakota's slightly tweaked version of the Uniform Power of Attorney Act (UPOAA) into law. That uniform act--now enacted in a total of twenty-eight states since approved by the Uniform Law Commissioners in 2006, represents a significant advancement in clarifying and regulating the use of powers of attorney. Given the widespread use of powers of attorney and their great potential for abuse and misuse, a comprehensive set of rule--both default and mandatory--are warranted. This article summarizes the UPOAA as well as the history of uniform acts which preceded it. The arrangement and structure of the Act and its incorporation of a statutory power of attorney form are detailed. Key deviations from the UPOAA approved in South Dakota are summarized. Finally, this article sketches some of most important powers of attorney opinions issued by the South Dakota Supreme Court in the last twentyfive years and considers which aspects of that jurisprudence may have been displaced or supplemented with the new power of attorney act statutes.

   Durable powers of attorney are everywhere. (1) They are a part of most every licensed attorney's estate planning "package" for a client. (2) They are in form books. (3) They are at LegalZoom[R] and elsewhere on the internet. (4) (LegalZoom[R] offers them for sale within their estate planning "bundles.")- (5) Indeed, they're everywhere on the internet. (6) Part of their popularity can be chalked up to pricing. (7) At LegalZoom[R], financial powers of attorney cost thirty-five dollars and elsewhere powers of attorney forms are simply free. (8)

   In the last few decades, durable powers of attorney have become commonplace, although most of the durable powers of attorney ("DPOAs") which have been executed are probably--as of yet, at least--un-activated. Most are crafted as "springing" powers of attorney which become effective only upon the occurrence of a future contingency, such as the principal's incapacity. (9) These "springing" powers of attorney contain a "trigger" which is the principal's later incapacity, an event which may or may not occur. (10) In this sense such a DPOA is ambulatory in the same way that a last will and testament is said to be ambulatory, following the principal/testator along until some future date. With a will, the date (of the testator's death) is certain to occur although its arrival date cannot be predicted with precision. (11) With a springing DPOA, however, the effectivenesstriggering date may never come. The principal may meet death without ever having experienced a period of incapacity. In that event, a springing DPOA is never activated. Still, the popularity of DPOAs has resulted in a fair share of the documents being activated, yielding not uncommon incidents of financial abuse as well as revealing unresolved legal issues.

   Why the appeal of these instruments? Again, part of their popularity lies in their ease of availability and relatively low cost. A second reason may be the perceived simplicity of the legal action: DPOAs are one form of the idea of appointing someone else to act on your behalf. A principal names an agent to act for the principal immediately or at some future date, with the scope of the agent's authority delineated and defined in a document and by statutory law.

   A third reason lies in their case of drafting, whether an attorney's assistance is engaged or (more likely) the do-it-yourself model is pursued. Compared to a last will and testament or even a statutory form advance directive, there are few selections and alternatives to ponder over. Durable powers of attorney are--to a greater degree than other estate planning documents--one-size-fits-all proposition. This means that there is less fuss which takes place between the decision to pursue one and signing on the dotted line. (12) Simply select your agents, elect whether the instrument should be effective immediately or spring into effectiveness upon a later incapacity, print it off, and you're ready to go.

   A fourth explanation of the widespread use of DPOAs is that they are extensively recommended by trustworthy sources. AARP recommends that every individual age eighteen or above have a durable power of attorney. (13) AARP explains: "A well-drafted power of attorney helps your caregiver help you. It can keep the gears of your life turning if you cannot." (14) A New York Times columnist says, "Without a power of attorney, your family might have no choice but to ask a court to appoint a guardian to oversee your finances." (15) Forbes describes DPOAs as "important" and "flexible." (16) There's a bandwagon appeal when everyone has a DPOA. Nearly three-quarters of Americans aged eighty and above have a DPOA. (17)

   Durable powers of attorney arc especially attractive to clients and consumers because of their functionality. When DPOAs work, they work; they permit an individual to avoid the expense, delay, and indignities associated with a courtsupervised guardianship or conservatorship proceeding.' (8) Durable powers of attorney provide a framework for managing property during an individual's potential future incapacity in the way that a will provides a game plan for assets upon death. A DPOA permits asset-management during life; a will disposes of assets after. The first addresses management of the status quo in the event of the principal's incapacity; the second provides for a distribution of wealth upon the testator's death.

   Like living trusts which have been fueled by the ambition to avoid probate, durable powers of attorney appealingly allow individuals to avoid guardianships. A cost-effective alternative to a bewildering proceeding with plenty of lawyer fees--this is the primary charm of DPOAs. (19) To be sure, there are other kinds of costs which become payable when the agent errs or even abuses the principal. (20) Fiduciaries who go astray are costly not just in terms of the attorneys' fees they generate but in the sense of the damage they do to the exploited individual. (21) A litigated power of attorney is at least as expensive (and perhaps more damaging) than a contested guardianship/conscrvatorship. Still, the appeal of DPOAs shows no signs of flagging. In South Dakota, the recent adoption of extensive new statutory text covering durable powers of attorney merits an examination of the same. That is the primary purpose of this article.

1. INTRODUCTION

   This article unpacks South Dakota Codified Laws chapter 59-12 and describes the new statutory framework for agent-fiduciaries acting under power of attorney instruments. (22) Chapter 59-12 became effective on July 1, 2020. It represents South Dakota's slightly modified version of the Uniform Power of Attorney Act. In the pages which follow, a short historical summary of DPOAs will be sketched. (23) Next, we will sum up an equally abbreviated narrative of the legislative process which led to the enactment of the power of attorney bill in the spring of 2020. (24)

   After explaining the historical background to DPOAs and the enactment of the legislative package which forms the core of this article, we will turn to an overview of the uniform act itself. (25) Next, the unique aspects of South Dakota's version of the Uniform Power of Attorney Act will be identified. (26) Finally, given the popularity of DPOAs, litigation arising out of their misuse and abuse ought to be reasonably foreseeable. (27) And so, over the years, a number of South Dakota Supreme Court decisions have been issued. (28) The last section of our discussion will reexamine these decisions in light of the new power of attorney legislation and consider the extent to which that case law remains unchanged and the extent to which it has been modified by the legislature. (29)

   Living wills and healthcare powers of attorney fall outside of the scope of the discussion which follows. A living will (or "advance directive") is a statutorily recognized statement governing life-sustaining medical treatment in the event of an individual's later incapacity coupled with a terminal illness or persistent vegetative state. (30) In other words, the legalese of end-of-life. Living wills are often discussed with clients in almost the same breath as DPOAs, but they perform a unique function. Healthcare powers of attorney are closer in kind to DPOAs. (31) A healthcare power of attorney (or "healthcare proxy") typically vests an agent with the authority to perform a wide array of healthcare decision-making on behalf of the principal if and when the principal experiences a loss of decisional capacity. (32) That authority may include authorization to make decisions concerning the types of end-of-life care typically governed by a living will. (33) Although healthcare powers of attorney share similarities with DPOAs, they are unique in terms of the particular...