Monday, August 6, 2007
Bridget J. Crawford (Associate Professor of Law, Pace University - School of Law) has recently posted her article on SSRN entitled The Tax Regulation of Contractual Intimacy: Transfer Tax Aspects of Powers of Attorney.
Here is the abstract of her article:
Powers of attorney are both the most common and the most abused of all estate planning documents. Newspapers and court cases are full of stories of alleged wrongdoing by agents who, whether due to misunderstanding or overt abuse, exceed the authorities given to them by the principal. Part I of this article provides an overview of the creation, scope and limitations powers of attorney. A power of attorney is, at its core, a contract for legal intimacy. It is an instrument that permits one person (called the attorney-in-fact or the agent) to act as the legal alter ego of another (the principal). Part II examines the estate and gift tax consequences of creating a power of attorney. Most lawyers assume (correctly) that the execution of a power of attorney does not give rise to a taxable gift by the principal and should not cause any estate tax inclusion in the estate of the agent. Part III explores how a fiduciary analysis of an agent's authorities is consistent with the Uniform Durable Power of Attorney Act. Part IV considers the implications of the Act's efforts to regularize powers of attorney. By making the principal/agent relationship more standard, some tax and estate planning professionals may shift their business practices in unexpected ways. Part V interprets the projected commodification of the principal/agent relationship in light of the way people live in the United States.
This article seeks to make two principal contributions to critical tax scholarship. The first is methodological. Instead of critiquing the existing law, this article explores a positive aspect of the existing wealth transfer tax rules. Critical tax scholarship to date tends to explore how existing law is biased, discriminatory or has a disparate impact on certain segments of the population. The article's second intended contribution is a normative one. In examining the tax treatment of intimacy that arises by contract, such as that between a principal and agent, this article opens the door for further exploration of ways in which the tax law can and should recognize choice-based human relationships. Scholars with an anti-subordination agenda should focus on ways to use existing tax laws to their advantage, given the political obstacles to left-oriented reform of the tax system.