The law on Power of Attorneys changed effective January 1, 2015. Part of the law was updated and made effective in July 2014; and the remainder went into effect on January 1, 2015. These changes are enumerated in 20 Pa. Cons.Stat.Ann. Chapter 56. The changes this year deal with the signing of the power of attorney and the notice provisions. Therefore if you are accepting a power of attorney to do business with someone, make sure that the document is valid. First, powers of attorney signed before January 1, 2015 are valid as written under the old law. Powers of attorney written and signed under the new law require that the signature of the principal (the one giving the power of attorney) must be witnessed by two (2) disinterested witnesses; and the signature must be made before a notary public. Therefore, before accepting a power of attorney written after January 1, 2015, make sure that it contains the witness signatures and the notary seal.
The other change deals with the notice pages at the front of the power of attorney These pages are meant to make sure the person giving the power of attorney realizes what he or she is doing. The notice makes it clear that the person who is getting the power of attorney (the agent) can perform a wide array of duties with the finances of the principal. It actually states that the agent has broad authority and can give away all the property during the principal’s life and substantially change how that property is distributed at the principal’s death. Therefore, the notice warns the signer to make sure that he or she has consulted an attorney before signing the document. The notice page to the agent is important as well. It now notifies the agent that he or she is to exercise the power in accordance with the “reasonable expectations” of the principal if known. If not known, then the agent is to act in the principal’s best interests, act only in good faith and only within the scope of the authority granted by the document. The agent must sign this acknowledgment to confirm that he or she will act in that manner. Both the notice to principal and acknowledgement by agent will be found at the beginning of the power of attorney document. Make sure they are present. In addition the new law states that certain agent actions must be specifically enumerated in the document before they can be performed. Those eight (8) areas are enumerated in the statute itself, and if those are one of the actions that is being requested, you must assure that the power of attorney explicitly grants that power. These areas are as follows: (1) Create, amend, revoke or terminate an inter-vivos trust; (2) make a gift; (3) Create or change rights of survivorship; (4) Create or change a beneficiary designation; (5) Delegate authority granted under the POA; (6) Waive the principal’s right to be a beneficiary of a joint and survivorship annuity, including a retirement plan; (7) Exercise fiduciary powers that the Principal has the right to delegate; and (8) disclaim property, including a power of appointment.
Part of the July 2014 changes include the ability of the person to whom the power of attorney is offered to assure that the power is valid before accepting it. If you accept a power of attorney in good faith and without knowledge that the signature is not genuine and that it appears to be signed in accordance with the new law, you are ok. You are immune if you accept a power of attorney as long as you do not have actual knowledge that the power of attorney or the agent’s authority are not void, invalid or terminated; or that the agent is exceeding or improperly exercising his or her authority.
In addition, the law now provides additional protection to the person to whom the power of attorney is offered. You can request an agent’s certification, an English translation (if the power of attorney is written in a language other than English), or the opinion of counsel that the agent is acting within the scope of authority if that request is made in writing with the reason for the request. Of these protections, the easiest to protect you is the request of a certification from the agent. That offers you a level of protection that you are following the law when you accept the power of attorney. We have prepared an affidavit that we give with a power of attorney that we prepare so that the agent is ready for this request if it is made. If any of these three requests are complied with, the person must then accept the power of attorney as valid. The law spells out very specific instructions on what a person can do to be protected when they accept a power of attorney to transact business.
It is helpful for every individual to discuss a power of attorney with their lawyer as part of their financial plan. It is also important that businesses have a policy in place to protect them in dealing with powers of attorney presented to them by an agent to transact business. You should discuss these policies with your lawyer to assure that all is done in accordance with the requirements of the new law. In doing so, it will help you to avoid the pratfalls associated with this area of the law.