Bizarre case on the mental capacity needed to execute a power of attorney and the dangers of relying on a power of attorney in Tennessee, even when it is notarized, and even when the reliance is in good faith. William Jerry Duke was involuntarily admitted to a psychiatric hospital. While in the hospital, he executed a general durable power of attorney in favor of his sister, Linda Wright.
The power of attorney was prepared by Wright, by copying a different power of attorney drafted by an attorney. It was notarized by a human resources employee of the hospital, who was apparently willing to swear that Duke was of sound mind. Wright used the power of attorney to admit Duke to a long-term care facility.
Sometime later, after Duke’s death, Duke’s widow wanted to invalidate the power of attorney. Apparently, it was in the best interest of Duke’s estate to void the contract with the facility. Interestingly, Wright now gave evidence against the document: “She testified that Mr. Duke did not appear to know what he was signing, and she said that she knew that he was incompetent, as he did not recognize her.” (Not sure whether the facility would have a claim against Wright or whether Wright could be charged with fraud?)
Not surprisingly, the trial court found that Duke lacked capacity to execute the power of attorney. And the appellate court affirmed. Intriguingly, however, the court also found that the facility could not rely in good faith on the acknowledged power of attorney. Using words that will surely discourage the acceptance of powers of attorney throughout Tennessee, the court stated, “[You are] not entitled . . . to simply rely upon someone who comes in and says, ‘I’m the POA. I have the authority. Here’s the Power of Attorney. Let me sign the documents.'”
Perhaps a better result would have been to allow the facility to rely on the power of attorney? The 2006 Uniform Power of Attorney Act, adopted by 11 states, but not yet in Tennessee, allows good faith reliance. And Tennessee’s own health care power of attorney statute allows an institution to rely in good faith on an agent’s decisions regarding medical treatment. Even the court, in its opinion, seemed to acknowledge, “[This] is a matter for the Legislature to determine, not this Court.” Until the legislature does address the issue, however, Tennesseans may want to consider using the much more expensive revocable trust or conservatorship rather than the much more affordable financial durable power of attorney.