An agent acting under a power of attorney can revoke an existing trust created by the principal and transfer assets to a new trust, a New Jersey Chancery Court has held.
Mildred Quick Muller created a revocable trust that was amended and restated in 1998. JP Morgan Chase was the trustee. In 2010, at age 97, Muller executed a new Will and new revocable trust. In the new trust, she named her great-nephew, James Neiman, as trustee. She also named Neiman as her agent under her power of attorney.
Neiman, acting under the power of attorney, sought to transfer $3.6 million in assets in the 1998 trust to the new 2010 trust. JP Morgan, the trustee of the 1998 trust, refused to make the transfer and sought direction from the Chancery Court. The court found that the 1998 trust permits the grantor to instruct the trustee to completely deplete the assets of the trust. The court found that the power of attorney granted Neiman full and complete power and discretion to take any actions that Muller could take, including transferring accounts to a trust of which Muller was the beneficiary. Accordingly, the court found that Neiman could effectively terminate the 1998 trust under the power of attorney, and direct the transfer of the assets into the 2010 trust.
This is a helpful decision, especially in assisting clients who are incapacitated. Flexibility is critical in estate planning, and this decision allows for greater flexibility by upholding a power of attorney holder’s broad right to act on the principal’s behalf. Having a power of attorney that grants broad powers to an agent is a practical and essential component of most estate plans.
Estate of Mildred Quick Muller, Essex County Chancery Court, unpublished opinion.