Submitted: September 8, 2014
This action originated as a Petition for Instructions by William Kemble Ketcham ("Kem"),  the attorney-in-fact for his elderly, incompetent mother, Paulina du Pont Dean ("Paulina"). The matter was referred to the Master, and the reader is referred to the Master's Report for a full statement of the facts; I will refer only to those facts necessary to my decision.
The Petition for Instructions was Kem's attempt to have this Court bless his denial of a request by his brother, J.S. Dean Ketcham ("Dean"), to be reimbursed from Paulina's funds for the educational expenses of Dean's children. Under a written power of attorney applicable here, Kem has the power to make gifts on Paulina's behalf "in a manner consistent with [Paulina's] past pattern of giving, in [Kem's] sole and absolute discretion." In response to the Petition for Instructions, Dean contended that the reimbursement he sought was consistent with Paulina's past pattern of giving in paying for her grandchildren's educational expenses. Dean also counterclaimed, alleging that Kem had improperly transferred Paulina's funds for Kem's and Kem's family's benefit and committed other breaches of fiduciary duty. Dean sought a forensic accounting.
The Master found that (1) Kem must account for his tenure as a fiduciary from the date the power of attorney was executed, and (2) payment for Dean's children's educational expenses that were billed directly by an educational institution comported with Paulina's past pattern of giving and thus should be paid from Paulina's estate. Kem has taken exceptions to both of these decisions of the Master.
A. Standard of Review
Pursuant to our Supreme Court's directive in DiGiacobbe v. Sestak, masters' reports must be reviewed de novo by this Court. Because the Master's determination did not turn on credibility of the witnesses' testimony, I may resolve the exceptions by reference to the record created before the Master.
1. Forensic Accounting
Kem does not contend that he can escape accounting for his use of Paulina's funds as her fiduciary. He contends that the Master erred, however, in finding that the written power of attorney that Paulina entered became effective shortly after it was executed. The facts are these. In the late 1990s, Paulina opened two accounts on which Kem was added as a signatory as a convenience to her. Kem concedes that he used his access to those accounts for Paulina's benefit—and thus acted as her common-law fiduciary—at that time, and had in fact been a signatory on her previous accounts dating back to 1979.
On October 26, 2004, Paulina executed a durable power of attorney. The durable power of attorney was not a springing power; it purported to be effective upon execution and specifically provided that Paulina's disability would not affect operation of the power granted to Kem. It is under this written power of attorney that Dean sought an accounting in the counterclaim. Kem contends that he did not accept the charge as a fiduciary under the written power of attorney until July 2009, when his mother was declared incompetent, and thus is not subject to an accounting for the period between the execution of the power of attorney in 2004 and Kem's purported acceptance in 2009.
A power of attorney becomes effective when accepted by the attorney-in-fact, explicitly or implicitly; it is sufficient evidence of acceptance that the attorney-in-fact exercises the power granted by the power of attorney. In arguing that he did not accept the power of attorney in 2004 because he had already been a signatory on Paulina's accounts, Kem is relying on the fact that he began acting as a fiduciary for Paulina when she put his name on her bank accounts beginning in the late-1990s, if not earlier. Kem argues that after the power of attorney was executed, he continued to act as a fiduciary using his status as a signatory on the accounts, and not by use of the power granted in the written power of attorney. He contends that he did not begin using the fiduciary authority granted by the written power of attorney until Paulina was declared incompetent in 2009, and thus need not account for his tenure as attorney-in-fact before that time.
This argument is lawyerly, but unavailing in this court of equity. Regardless of the source of the fiduciary authority Kem was employing, he is still required as a fiduciary to use his principal's property for her benefit only and to act scrupulously in her regard. Kem does not argue that he is altogether immune from an accounting, suggesting instead that the appropriate start date is July 2009, when he purportedly accepted the power of attorney. For the reasons stated above, I affirm the decision of the Master that a forensic accounting must ...