Does “Unlimited” Gifting Power in POA Protect the Agent from Criminal Liability for Self-Gifting? PA Appellate Court Says “No”

Following a nonjury trial in 2012, David Patton was convicted of 95 counts of statutory theft by unlawful taking, arising out of his use of a power of attorney (POA).  The POA named him as agent for his 86 year-old aunt.  At issue was more than $200,000. Patton appealed the conviction, alleging the POA that expressly granted him authority to make “limited or unlimited gifts,” made it impossible for him to be held liable for theft by cashing checks and making withdrawals from his aunt’s accounts for his personal use in 2008, 2009 and 2010. In September 2014, the Superior Court of Pennsylvania, an intermediate appellate court, issued a “nonprecedential” written opinion affirming the convictions, concluding:

“Simply stated, we reject Appellant’s bold claim that the ‘unlimited gift’ provision in the power of attorney provided Appellant with a license to steal [his aunt’s] assets and use all of her money for Appellant’s own benefit. To the contrary, the gifting power was clearly subject to the condition [stated in a statutorily required affidavit signed by Appellant] that Appellant use the power ‘for [his aunt’s] benefit’ – and Appellant clearly violated this condition when he took all of [his aunt’s] money and used it as if it was his own. Therefore, since Appellant’s actions were not authorized by the power of attorney, Appellant’s sufficiency of the evidence claim necessarily fails.”

In reaching this decision, the appellate court adopted the trial court’s “meticulous” rulings as its own.  In the trial court’s final order, the judge rejected the defendant’s testimony that he had no awareness or notice that using the POA  to make the transfers in question was a crime.  The trial judge wrote: “He did not need to be notified in writing to know that he could be charged with theft for taking for his own personal use over $200,000 of [his aunt’s] savings, using some of it to go gambling in Erie and depriving her of sufficient funds to pay for her nursing home care in her old age.”

An additional interesting, and perhaps confusing aspect of the case, is testimony by the attorney who drafted the POA. 

When called by the defense to testify as “an expert” on powers of attorney, as well as a fact witness, the attorney testified he “always” included both “limited and unlimited” gifting authority in his POAs.  He testified he explained to the aunt that the broadly-worded POA enabled the agent to “do anything that she could do.” On direct examination, he testified the gifting language was “completely unconditional.” 

However, later on cross examination by the district attorney, the drafting attorney “retreated” from his unconditional characterization, apparently testifying that authority in POAs is always subject to the Pennsylvania-required condition that the agent “exercise the power for the benefit of the principal.” 

Does this history suggest important concerns about the role of attorneys in advising principals, especially elderly individuals, on scope of authority used for POAs? It is unclear from the history recited in the Patton opinions whether the nephew was counseled or advised by any attorney regarding the purported “unlimited gifting” authority, or about how he should behave in light of the express condition contained on the separate affidavit signed by the agent. Could the drafting attorney reduce the potential for “abuse” with different POA gifting language, or specific warnings or directions to the agent? Should attorneys drafting POAs offer different options to clients about “gifting” authority, rather than one-size-fits-all “unlimited” gifting language? 

The case was decided before the effective date of the Pennsylvania legislature’s most recent changes to POA laws, outlined earlier here in the Elder Law Prof Blog and here in a blog post by ElderLawGuy Jeff Marshall.

For the full opinion by the Pennsylvania appellate court, including the incorporated rulings by the lower court, see Commonwealth of Pennsylvania v. David L. Patton, Case Nos. 1973 and 1974 WDA 2012, filed September 19, 2014.  Hat tip to York, Pa attorney Rob Clofine for sharing copies of the Patton court rulings.