This 2nd column on the 2018 major-rewrite power of attorney (POA) law will address common but avoidable mistakes individuals may make, and extra elder law planning provisions many individuals now provide in their POAS to protect their assets.
New Revocation Rules. The revocation of a POA by the Principal must be in writing, and the Agent needs to have actual notice, or the Principal can send notice of revocation to the last known address of the Agent. Under the 2018 law, this service is effective, but your attorney may recommend notice by registered or certified mail as well to ensure you have proof of service. If an Agent is not notified or does not have actual knowledge of the revocation, any action they take will be presumed to be valid.
Simply creating a new POA does not revoke the prior one, unless the language of the new POA states that it does. But remember, the prior Agent needs notice of the revocation.
Some execution (signing) laws you may not know.
- What if your loved one is sound of mind (a clear requirement), yet he is unable to sign his name fully but he can put his “X” on a document; or, he cannot even put his mark? Your loved can still execute a POA, if he follows the special but very specific procedures the law requires.
- Can’t you just pull a form off the Internet and figure out the execution part? The written and execution laws are written for the protection of the Principal from Agents who are not always pure of heart or who are unexpectedly tempted by the access to ready assets. This column regularly praises the no-cost Advance Directive documents Best Health (Baptist Medical Center) and Hospice provide. But you really are at risk if you try to do a financial POA on your own, which may (innocently to you) contain conflicting boilerplate clauses, or which you may incompletely execute, resulting in a defective POA.
Other practical tips.
- Ask your attorney to record your POA at the courthouse. There are various transactions which require it to be recorded. Plus, it provides a level of assurance to your bank and others with which your Agent may deal on your behalf.
- Your Agent may deal with someone who wants a few days to review the POA, which the law allows them to have. To help ensure there is no delay, bring your POA (and your Agent if you can) to meet with them ahead of time to answer any questions.
- What about any necessary planning in case you have to go into a long-term care facility? Standard or form POAS do not have an expanded, but very specific, authority of your Agent to transfer/realign your assets, following the explicit legal (and ethical) rules the law requires, to facilitate your ltc planning. You are giving your agent expanded transfer authority, should you be incompetent at the time of your planning, and the law appropriately requires you give your Agent this explicit authority. Discuss with your attorney whether the inclusion of this important planning option in your POA is appropriate for you.
It cannot be overemphasized how important your financial POA is to your planning. The 2018 rewrite of the POA laws helps to tighten the protections the law provides to the Principal from some Agents who may not fully understand the Agent is in a position of trust when he has access to the Principal’s assets. A properly written and executed POA with the law’s added protections may help any potential issues to be the best legal (and financial) issues you never have.
Remember: An informed choice is a smart choice.
Mike Wells is a partner with Wells Law, PLLC in Winston-Salem. His email address is email@example.com and his telephone number is 336.283.8700.