You may have heard about the new power of attorney legislation that became the law in Pennsylvania in July. If you have executed a power of attorney or are thinking about executing a power of attorney, you may be wondering how that legislation affects you.
Some of the changes made by the law, such as protecting banks from liability, were effective immediately. Other changes, such as changes to the Notice and Acknowledgement parts of the power of attorney will become effective January 1, 2015. Almost every day, new articles appear and professional meetings are held as the various communities such as banks, lawyers and others concerned with estate planning and elder affairs consider the interpretation and implementation of the changes.
If you have a properly executed power of attorney, your power of attorney is valid and will remain valid even after all of the new changes take effect.
Under any circumstances, you should always look at your estate planning documents every few years, or when you have major changes within your family, to ensure that they still reflect your wishes.
Reviewing your estate planning needs becomes more important as a result of this new legislation. The new legislation does the following:
· Expands immunity for third party reliance such as by banks;
· Creates greater liability for those who reject a valid power of attorney;
· Allows for greater flexibility to the powers granted to your agent;
· Enables you to tailor certain powers to fit your specific needs;
· Expands mandatory duties that are not subject to modifications or waiver including:
o Requiring the agent to act in accordance with the principal’s reasonable expectations to the extent actually known by the agent
o Acting in good faith
o Acting within the scope of the authority granted within the power of attorney
You may be better able to modify your power of attorney document to fit your individual situation. This is more important for some people than for others. For example, if you want to be very specific about whether your power of attorney or agent can make gifts, you will want to revise the documents. If you have a closely-held business, you will want to revise the document. In general, if you have concern about limiting and describing in greater detail the authority that your agent or power of attorney will have under your document, then you should consider reviewing that document with an estate planning attorney.
One additional word of caution. This is the first of a number of expected changes as the legislature works to reduce elder abuse and the abuse of powers of attorney in general. For example, Senate Bill No. 621 is anticipated to make additional changes to the power of attorney law. Technical amendments are under discussion for possible introduction in 2015 or 2016 as the Pennsylvania Supreme Court Task Force on elder abuse and various legislative committees consider these changes.
Jon Gruber is an attorney at Russell, Krafft and Gruber, LLP in Lancaster, Pennsylvania. He received his law degree from the University of Virginia and practices in a variety of areas, including Estate Planning and Estate and Trust Administration.