The Pennsylvania laws regarding your power of attorney document have recently changed.
Act 95 of 2014 (House Bill 1429) was signed by the Governor on July 2, 2014. Many of the changes were not effective until January 1, 2015 and are based on the Uniform Power of Attorney Act.
I have many clients ask if the changes that took place in January 2015 affect them and/or their power of attorney documents.
The simple answer is - Yes.
Your old power of attorney did not become invalid but many of the provisions of the document concerning certain powers and execution requirements have changed. It is important to make sure the document complies with the most recent changes in the law and that it still does what you want it to do.
Here is a summary of the main changes that took place in January 2015:
1. Execution- 5601(b): The execution requirements were changed to require acknowledgement before a notary public or other individual authorized to take acknowledgment and to be witnessed by two individuals, neither of whom is agent or Notary Public. These requirements do not apply to a POA that provides exclusively for medical decision making powers.
2. Notice- 5601(c):. The Notice language has been updated to reflect duties that the agent may not waive.
3. Acknowledgement-. The acknowledgement has been updated to reflect duties that the agent may not waive.
4. Agents Duties and Powers- 5601.3, 5601.4 and 5603: There are duties in 5601.3(a) that now cannot be waived. Remember an agent must act in accordance with the principal’s reasonable expectations to the extent known by the agent and, otherwise in the principal’s best interest. There are also duties that now can be modified or waived in 5601.3(b). These duties include acting loyally for the principal’s benefit, keeping the agent’s funds separate; acting with care, competence and diligence; keeping records; cooperating with health care agents; and preserving the principal’s estate plan.
The lawyer drafting your document should carefully consider whether any of these duties should be waived by the principal. Failing to waive the duties related to joint accounts and maintaining the principal’s estate plan may limit asset protection and Medicaid planning options if the principal needs long term care.
Another set of agent’s duties found in 5601(c) provides limitations on the liability of an agent for his or her actions. For example, an agent that acts in good faith shall not be liable to a beneficiary of the principal’s estate plan for failure to preserve the plan; an agent acts with care, competence and diligence for the best interest of the principal shall not be liable solely because the agent also benefits from the act; and absent a breach of duty to the principal, an agent shall not be liable if the principal’s property diminishes. This power is especially important if you have a corporate agent acting as your power of attorney like a bank or trust company.
Under section 5601.4 of the new law there is a list powers that must be specifically granted by the principal. These include the power to create, amend, revoke or terminate an inter vivos trust, make a gift, create or change rights of survivorship; create or change a beneficiary designation; delegate an authority under the power of attorney, waive the principal’s right to be a beneficiary; exercise fiduciary powers; and disclaim property. Whereas, under section 5603(a.1) general gifting language in a power of attorney now only authorizes limiting gifting.
Whether or not to include these powers should be carefully considered by the lawyer who is drafting your power of attorney and the provisions in your old document may need to be changed to account for these powers that must be specifically granted.
This new amendment to the power of attorney law reverses the effect of the 2009 Pennsylvania Supreme Court decision of In re Estate of Slomski, 987 A.2d 141 (Pa. 2009) that held that language in his power of attorney that authorized his agent to “exercise all powers with respect to retirement plans that the principal could if present”, allowed the agent to change the beneficiaries of the retirement plan. This is not the case any longer and your power of attorney document may need to have this provision modified.
5. Acceptance and Reliance on Your Power of Attorney- 5608: The power of attorney law was amended to address the concerns raised in another important power of attorney case known as the Vine court case and its interpretation of section 5608. The new section 5608 provides broad protection for banks and other third parties who in good faith accept a power of attorney without actual knowledge that a signature or mark is not genuine.
All of these changes are based on the Uniform Power of Attorney Act and should give you a good understanding of why your power of attorney document needs to be drafted to work with these changes so it does what you need it to do, when you need it to do it.
If you become suddenly incapacitated in a car accident, you don’t want to be left with the old power of attorney drafted before January 2015 that doesn’t reflect your intentions and limits your agent’s ability to act on your behalf.
Contact our office at 610-933-8069 to discuss your power of attorney document.