Pennsylvania recently passed Act 95 of 2014, which introduced sweeping changes to the law governing General Powers of Attorney. The changes fall into three main categories: (1) execution requirements, (2) powers that must be specifically provided in the power of attorney in order to be effective and new restrictions on the exercise of those powers, and (3) protection of third parties who rely on the power of attorney.

1. Execution.

All general powers of attorney executed on or after January 1, 2015 must be executed in the presence of a notary and two witnesses. Neither the agent nor the notary may be a witness. In addition, the statutory notice which is the cover page for the general power of attorney (which must be executed by the principal) and the Acknowledgement (which must be executed by the agent) have been modified.

2. Powers that must be specifically provided.

The new law lists the following eight powers that are only effectively granted to the agent if they are expressly included in the power of attorney: (1) to create, amend, revoke or terminate a living trust, (2) to make a gift, (3) to create or change rights of survivorship, (4) to create or change a beneficiary designation, (5) to delegate authority granted under the power of attorney, (6) to waive the principal's right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan, (7) to exercise fiduciary powers that the principal has authority to delegate, and (8) to disclaim property, including a power of appointment. If these powers are not expressly granted in the power of attorney, the agent is not permitted to perform these acts.

3. Third Party Reliance.

In Commonwealth v. Vine, 607 Pa. 648 (Pa. 2010), the Pennsylvania Supreme Court opened the possibility that one relying in good faith on a power of attorney could be liable to the principal or another party for doing so. The Supreme Court recognized the potential abuse that occurs through the exercise of general powers of attorney by one purporting to be a validly appointed agent. However, the Vine case gave rise to concern among third parties such as banks that are regularly asked to rely on general powers of attorney which appear on their face to be valid. The new law is intended to protect such third parties, by, among other things, expanding the rights of third parties to reject powers of attorney, or require assurances (including opinions of counsel) before acting upon them. Some believe that the new law is an overreaction to the concern about abusive use of powers of attorney, and could limit the effectiveness of validly executed powers of attorney. Only time will tell how third parties, and ultimately the courts, will apply the new law.

If you have a validly executed general power of attorney it is not necessary to execute a new power of attorney as powers presently in effect will remain valid. However, to increase the probability that your power of attorney will be relied upon without scrutiny, you may wish to execute a new general power of attorney which conforms to the new law, especially if you have granted or wish to grant any of the eight specifically enumerated powers listed above. We encourage you to review your power of attorney to understand the powers you have granted to your agent, and also to ensure that your named primary and alternate agents are the individuals you want to have those powers.