In July 2014, Governor Corbett signed into law Act 96 of 2014. The new law makes substantial changes to the current financial power of attorney (POA) law. The new law now requires all financial POAs to be notarized and witnessed by two individuals. It specifies new language that must be included in the “Notice” provision as well as the “Acknowledgement of Agent.”
The new POA law also allows the “principal” (the person creating a POA) to determine what duties to impose on the agent. Under the new law, there are minimum duties that all agents must comply with. These include the duty to (1) act in accordance with the principal’s “reasonable expectations”, if known, (2) act in good faith and (3) act only in accordance with the scope of authority granted. However, a principal may also choose to impose additional duties upon an agent, including, for example, the duty to keep a record of all receipts, disbursements and transactions made on behalf of the principal.
Also of particular significance, the new POA law requires that certain powers, commonly known as “hot powers,” be expressly stated in the POA if you desire that your agent have the authority to exercise these powers. For example, if you desire that your agent have the power to change the beneficiaries of your life insurance policy, you must specifically state such in the POA.
Another “hot power” is known as the “gifting power.” As a board-certified elder law attorney, in my opinion and experiences, the “gifting power” in many POAs is often improperly drafted. The lack of a properly drafted gifting power in a POA can be fatal for Medicaid , nursing home or long-term care planning. This is especially true for married couples (where one spouse enters a nursing home) or in those instances where a parent enters a nursing home and has a disabled child or a child that lived at home with the parent before the parent entered a nursing home.
The majority of the new law’s provisions, including the new execution requirements, takes effect on January 1, 2015. However, there are certain provisions that were effective immediately upon the law’s enactment in July.
In summary, you must be very careful signing a power of attorney. The POA is perhaps the most important legal document you may sign. Your POA should be drafted and tailored to your particular circumstance and needs. The new law validates this point more than ever. Unfortunately, most believe that all POAs are alike. They are not. What may be an appropriate “power” for you to include in your POA may not be appropriate for another to include in his or her POA. If the powers in your POA are limited or not properly drafted, and you become incapacitated, your POA may not be worth the paper it’s written on. Therefore, be careful and ensure you seek competent legal counsel — ideally a certified elder law attorney — before signing a POA. If you would like to schedule to learn more about POAs, feel free to go to our website at www.wfjlaw.net and complete and submit the “contact form” or call Eric M. Mika, CELA, at 570-622-5933.