Pennsylvania Makes Significant Changes to Power of Attorney Law

by McNees Wallace & Nurick LLC
Contact

 

Act 95 of 2014, signed July 2nd by Governor Tom Corbett, made significant modifications to the law governing Powers of Attorney (Chapter 56 of the Probate Estates and Fiduciaries Code, 20 Pa.C.S.A §5601, et. seq.). The changes affect the execution, validity and liability issues surrounding Powers of Attorney and their use by Agents. Because Powers of Attorney used for health care purposes are essentially unchanged by Act 95, this article addresses only financial Powers of Attorney.

 

Durable General Powers of Attorney (as used in this article, “POAs”) are fundamental estate plan documents used to allow a client (the “Principal”) to appoint another person or entity (the “Agent”) to be a substitute decision-maker as to a broad range of the Principal’s financial matters and transactions.

 

Typically, POAs are used when the Principal is incapacitated or not able to be physically present for the transaction at hand. For elderly persons suffering from dementia or any person struck by a catastrophic event that results in an inability to manage his or her own financial affairs, POAs have been recommended by estate planning attorneys as powerful and cost-minimizing alternatives to court-appointed guardianships.

 

As noted above, POAs are governed by a state statute based on (but not identical to) a uniform law promulgated by national estate planning and elder law professionals. The original statute enumerated certain powers that could be granted under a POA and has been amended several times, most significantly in the year 2000 to require the addition of a Notice that must be signed by the Principal and an Acknowledgement that must be signed by the Agent before use of the POA.

 

Unfortunately, POAs have been used by unscrupulous family members, neighbors, and criminals to separate the Principal from his or her assets. Because some of these cases involve intentional theft and others involve misuse of funds by persons caring for elderly relatives and friends, authorities have long sought additional provisions in the statute to combat these abuses. Those efforts have resulted in the changes set forth in Act 95, some of which took effect with the law’s enactment and some of which will take effect on January 1, 2015.

 

Below is a summary of the significant changes.

 

  • POAs executed after January 1, 2015 will need to have revised Notices and Acknowledgements. The revised language includes the new direction (formerly implied but now express) that the Agent acts only in accordance with the Principal’s wishes if known by the Agent and, if not known, in the Principal’s best interest; and that the Agent acts in good faith and only within the scope of authority of the POA document.
  • Powers executed on or after January 1, 2015 must be witnessed by two people and notarized. Previously, unless the POA was being signed by ‘mark’ by someone unable to sign their own name, the POA did not need to be witnessed or notarized, except to handle real estate matters. The new rules weigh strongly in favor of executing all estate planning documents, and particularly POAs, at an attorney’s office where a notary and witnesses are readily available.
  • Certain specific powers have become so-called ‘hot’ powers and must be expressly included in the POA to be authorized. Formerly, only the power to make gifts had to be spelled out, but now powers such as (a) the right to change beneficiary designations on retirement plans, annuities, and life insurance policies; (b) the right to disclaim property; (c) the right to amend or revoke a revocable trust; and (d) the right to create or eliminate a survivorship interest in property (for instance by changing the title of a joint account to tenants in common) require specific authorization and definition of scope.
  • The gift power was the original ‘hot’ power and Act 95 further delineates what gifts may be made by Agents and to whom such gifts may be made. Inclusion of a power to make a gift in a POA should be thoroughly discussed between the client and his or her attorney.
  • Finally, Act 95 clarifies and modifies the extent to which POAs may be relied upon by third parties (banks, brokerage firms and the like). While third parties may generally rely upon properly executed POAs, the Act also provides that a third party may (a) ask the Principal’s attorney to provide an opinion as to whether the Agent is acting within the scope of authority granted by the POA, (b) request an English translation of the POA, and (c) ask the Agent to certify under penalty of perjury any factual matter regarding the Principal, the Agent, or the POA. The cost of such assurance is to be borne by the Principal. Furthermore, Act 95 also provides that a third party who refuses to accept a POA may be subject to civil liability for harm caused to the Principal’s economic interests.

While it is not necessary that all clients get new and revised Powers of Attorney, we recommend the following:

  1. All Powers of Attorney executed prior to 2001 should be reviewed for compliance with the current law.
  2. Any new Powers of Attorney must be in the revised form set out in the statute.
  3. Clients should consider discussing with their attorneys POAs signed since 2001 if they are concerned about their Agent being able to exercise certain ‘hot’ powers or if they would like to curtail their Agent’s use of those powers.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© McNees Wallace & Nurick LLC | Attorney Advertising

Written by:

McNees Wallace & Nurick LLC
Contact
more
less

McNees Wallace & Nurick LLC on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.