As estate planning attorneys, we prepare plans for clients which include documents such as wills, trusts, and powers of attorney, and advise clients on their use. In that regard I thought a recent California appellate case would be of interest to estate planning attorneys around the country.
In Monschke v. Timber Ridge Assisted Living, LLC, (Cal. App. 1st, No. A144289, January 29, 2016), Marjorie Fitzpatrick entered the defendant’s facility. Her daughter, Valerie Monschke, signed the residency agreement as Marjorie’s agent under a power of attorney. Valerie had chosen the facility for Marjorie because the facility had a memory care unit. Unfortunately, one evening Marjorie was allowed to exit an exterior door of the facility unattended and she sustained injuries which resulted in her death two weeks later. When Marjorie died, Valerie, as personal representative of Marjorie’s estate, filed suit for wrongful death and elder abuse against the facility.
The facility claimed that the arbitration clause in the residency agreement, which Valerie had signed as Marjorie’s agent, precluded Valerie from filing suit in her capacity as personal representative.
The trial court held that, as personal representative, Valerie was not bound by the arbitration agreement, even though she had signed it in her capacity as agent, and even though it purported to bind all “heirs”. The Court of Appeal affirmed, holding that an agreement can only bind the parties to it. The only parties to the agreement were Marjorie and the facility. As personal representative, Valerie was suing on behalf of the heirs, not the decedent. Since the heirs (including Valerie) were not parties to the agreement, they could not be bound by it, even though the agreement purported to bind the heirs.
While this case may not be binding precedent everywhere, it is an important reminder of the importance of the plans we put in place and how the capacity in which a person is serving makes a big difference.
Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (800) 846-1555
www.aaepa.com
- Double Your Gifting with Spousal Gift-Splitting - January 11, 2022
- Tax Planning for 2022 - December 28, 2021
- Donor Advised Funds: Too Good to Be True? - August 10, 2021
