Big changes are underway for anyone employing a Pennsylvania
Power of Attorney document in Pennsylvania. Act No. 95, signed by the governor on July 2, 2014, is designed to curtail abuses by agents acting under a power of attorney, as well as
allow some flexibility in the agent’s services to the principal. This new
legislation applies to financial power of attorney documents only. Advance health care directives or mental health power of attorney documents are not
affected.
This legislation was the culmination of three years of work
and negotiation by several groups including the Pennsylvania Association of
Elder Law Attorneys (A division of the National Academy of Elder Law
Attorneys), Pennsylvania Bar Association, the Joint State Government
Commission, and the staff of Pennsylvania Senator Greenleaf and Representative
Keller.
The changes fall into three categories: 1. Changes in the
form itself; 2. Changes in the agent’s duties; 3. Changes in the powers an
agent may exercise under Pennsylvania laws. Some changes take effect immediately, others will be implemented on January 1, 2015.
Changes to the form itself: Every power of attorney document must now be
notarized and signed by two witnesses. The affidavits that accompany the
document are also modified to provide a more explicit warning to the principal.
For example, the principal is warned that the agent may have the power to give
away all his property, or even change how his property is distributed upon
death. A new mandated clause suggests
that the principal should seek the advice of an attorney at law before signing
the document.The acknowledgement for that the agent signs is also modified to
direct the agent to act according to the principal’s reasonable expectations to
the extent they are known, otherwise in the principal’s best interest. This
change is important to elder law attorneys who may have to work with an agent
to qualify a principal for Medicaid, VA benefits or some other program. Many
times a principal will neither plan for, nor expect that her entire estate will
be depleted by nursing home costs when drafting the original document.
The new law specifically provides that in most cases, a
photocopy or electronically transmitted copy of a power of attorney shall have
the same force as the original. Prior to this change in the law, the agent
could be forced to produce the original unless the document itself stated that
photocopies could be used in lieu of the original.
Changes in the agent’s duties: In return for increased immunity to anyone
who relies on an agent acting under a power of attorney, outside parties may
now demand more of an agent. Any outsider who can articulate a specific reason to
suspect the authenticity of the document, or the power of the agent to perform
the transactions taking place, may request from the agent an opinion of counsel
that the document is legal and the agent is acting legally.The cost of
obtaining that opinion is born in most cases by the agent.
An agent must now keep records of all receipts and disbursements
on behalf of the principal. The agent must produce financial records within 30
days if called upon by a court, or by the executor of the estate of the
principal, or a guardian, governmental agency or any other fiduciary acting for
the principal.
An agent is still entitled to compensation for her duties
under certain conditions. Any outside party who without good cause refuses to accept a power of
attorney, is liable for civil damages, including the loss
in the value of the principal’s property, proximately caused by the refusal to
comply with the instructions of the agent.
Changes in the powers an agent may exercise: The new law contains a list of actions that
cannot be taken by an agent unless those powers are expressly granted in the power
of attorney document. Included in the list are the powers to make gifts;
create, amend or revoke some trusts; delegate authority; disclaim property
rights; and other powers too numerous to mention here. In the case of making
gifts, there are additional limitations in a new section which redefines those
powers. Under the new law, the agent cannot take any action which would create a conflict of
interest between her and the principal, including saving funds so the agent receives a lager inheritance from the principal. The agent must expend funds necessary
for another agent to act under an advance medical directive executed by the
principal. So, if the agent under the advance medical directive needs funds to
arrange for a copy of medical records or to hire a geriatric care manager or
any similar medical need, the agent under the financial power of attorney must
comply with that request.
This is not a complete review of the new law, and additional articles will follow. If you have any questions, add them to the comments and I would be happy to answer them.
Correction, 7/14/14. Previous editions of this post indicated the law was still on the governor's desk. In fact, the legislation was signed into law on July 2, 2014 as Act 95. It modifies the existing law, and is incorporated in Title 20, Sections 5601 - 5611.
Correction, 7/14/14. Previous editions of this post indicated the law was still on the governor's desk. In fact, the legislation was signed into law on July 2, 2014 as Act 95. It modifies the existing law, and is incorporated in Title 20, Sections 5601 - 5611.
Stay well until the next post:
Bob Gasparro, Esq.
robert.gasparro@lifespanlegal.com
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