Uniform Power of Attorney Act
On February 23, 2005, I attended the State Laws Committee meeting at the annual ACTEC meeting during which Prof. Linda S. Whitton provided an interesting and comprehensive account of recent developments on the Uniform Power of Attorney Act (interim draft of January 19, 2005). Below is a summary of her presentation:
Prof. Whitton explained that the drafters are focusing on two objectives:
1. To facilitate the acceptance of durable powers of attorney, and
2. To deter abuse by a person seeking to use a durable power of attorney in an inappropriate manner.
Prof. Whitton described the basic structure of the Act as follows:
• Article 1 – General Provisions and Definitions
• Article 2 – Powers
• Article 3 – Statutory Form Power of Attorney
• Article 4 – Miscellaneous Provisions
The drafters elected to include a statutory form despite the fear that such a form could make the form too susceptive to use without legal counsel and hence abuse. However, because seventeen states already have a statutory form with eight of those modeled after the Uniform Statutory Form Power of Attorney Act, the drafting committee realized that forms are currently readily available and thus decided to create a user-friendly form which also educates the user. The drafters are crafting the form to be both usable by attorneys and acceptable to financial institutions and others. Prof. Whitton explained that input from financial institutions has been favorable because they would like a widely accepted form so they can more easily handle interstate transactions.
Prof. Whitton described the areas in which the Drafting Committee has been engaged in significant discussion and revision:
• Presumption: The power of attorney is now presumed to be durable and thus the term “durable” was dropped from the title of the proposed act. (§ 105)
• Creation: The principal must sign or have a proxy sign the power of attorney. An acknowledgment is not necessary. However, if the principal’s signature is acknowledged, it will be presumed genuine. The Drafting Committee decided to make acknowledgment optional out of a concern for homebound individuals who may have difficulty getting a power of attorney acknowledged. (§ 106)
• Protection of Persons Who Accept the Agent’s Authority: Under § 119, a person who accepts the power of attorney in good faith is protected even if the power of attorney later turns out to be invalid or revoked as long as the person accepting the power no knowledge of the invalidity or revocation. Section 104 addresses the issue of knowledge and was expanded to cover knowledge of an organization. If one person of an organization with multiple offices or branches has notice, the entire organization is bound after three days. A person accepting a power has no duty to inquire and may not require any additional or different form. A copy is treated as valid as the original. (§ 119)
• Liability for Refusal: Under § 120, a person who refuses to honor a power of attorney is liable for the greater of actual damages and $1,000, plus costs and reasonable attorneys’ fees. The person does have, however, a five business day grace period to decide whether to honor the power of attorney. The section also provides a list of acceptable “excuses” for a person to refuse to honor the power of attorney such as having knowledge that the power has been revoked or knowing that a report to adult protective services regarding the principal has been made.
• Agent’s Duties: Section 114 describes the agent’s duties which include that the agent must act within the reasonable expectations of the principal, cooperate with any health care agent, and take into account principal’s estate plan and preserve it as much as possible. Just because agent has a conflict of interest (e.g., a shared property ownership with the principal) does not necessarily preclude the agent from serving. Subsection (h) lists the parties who may request a report from the agent. This is a relatively small list but note that § 116 contains an extensive list of people who may request a judicial accounting from the agent.