After they had debated the measure for more than a year, lawmakers in the Palmetto State adopted the Uniform Power of Attorney Act.
At one time, nearly all states used the UPOAA. But as originally designed, the measure had some gaps which state legislatures essentially took it upon themselves to fill in. Now, twenty states have adopted the latest version of the law, which drafters say is more in line with the measure’s original purpose and intent. Benjamin Orzeske, chief counsel at the Uniform Law Commission, says the new and improved UPOAA has additional safeguards to help prevent elder financial abuse, streamlined language that more clearly sets out the duties of agents, and clearer rules regarding both agent resignation and agent liability.
Other states are debating the new UPOAA and may adopt it soon.
In many countries, states or provinces or prefectures have almost no autonomy and a central government dictates policy in even seemingly minute areas. But in the United States, there is a long tradition of states’ rights, especially with regard to the state’s relationship with individuals. So, marriage and divorce laws, criminal laws, and inheritance laws fall within the purview of individual states, although there are federal laws and standards in some of these areas as well.
But the world is a lot smaller today than it was a hundred and fifty years ago, and there is more of a need to harmonize state laws. These efforts fall into basically two categories:
- Model Laws: As an example, the Model Penal Code, which was developed in 1962, was never intended to replace state criminal laws. Rather, the MPC is more of an ideal to follow in this area.
- Uniform Laws: In contrast, the Uniform Law Commission has drafted dozens of laws, like the Uniform Child Custody Jurisdiction and Enforcement Act, that are designed to be enacted almost as-is.
The UPOAA falls squarely within the second category, largely because of the need for a standard that is consistent between the states and the overall disdain, at least in some minds, for additional federal regulations.
As mentioned earlier, the original version of the UPOAA that was introduced in the 1980s had some hidden flaws. The new version revolves around a number of core principles, which include:
- Agent Liability: An agent, which in this case is called an attorney-in-fact, has a fiduciary duty towards the principal, or the person who appointed the agent. That duty means that the agent must put the principal’s interests at the forefront in every financial transaction. But sometimes the two items overlap. Assume Andrew Agent sells Peter Principal’s land. Peter sees a nice return, and the new owner hires Andrew’s construction company to redo the parking lot. In some states, that transaction could be considered a breach of fiduciary duty. But under the UPOAA, it is probably acceptable, as long as there are no other facts (i.e. Andrew’s company did not receive a kickback or win a no-bid contract).
- Notice: In some states, Peter could revoke Andrew’s authority and Andrew still had “apparent authority” to conclude transactions on behalf of Peter. The new UPOAA puts limits on this practice. The notice rules work both ways, because in most cases, Andrew cannot simply quit without notice under the UPOAA.
- Portability: Out-of-state banks, insurance companies, and other financial institutions must accept a UPOAA-approved power of attorney except under very strict circumstances.
Other core principles include empowering principals to alter the terms of the fiduciary duty if needed and requiring gift-making powers to be expressly stated in the POA.
Why Obtain a Power of Attorney
Along with a will and trust, a POA is essentially the third leg of the stool when it comes to comprehensive estate plans. If they only have one or two legs, most stools fall over, because they are incomplete.
A POA allows you to appoint someone you trust to manage your financial and other affairs when you are unable to do so. In most cases, the grant can be either temporary or permanent. Many people enjoy travelling, and they do not like their vacations interrupted by business matters. A POA can appoint a temporary agent to fill in during your absence. If available, this arrangement is particularly beneficial if there are ongoing merger or acquisition negotiations.
But most POAs take effect when the principal dies or becomes disabled, so these documents ensure a seamless transition in bill-paying, bank deposits, and other financial transactions. As an added bonus, a POA may take the place of guardianship or conservatorship proceedings. In other words, you pick your own guardian in advance, if the day ever comes when you need one.
Some people believe that if they are married or they have a trust than they do not need a POA, but this is not necessarily true. A spouse only has authority over some jointly-owned property, and a trustee or successor trustee only have authority over the corpus (property in the trust). A POA effectively fills in the gaps.
A power of attorney helps you maintain control over your life. For prompt assistance in this area, contact an experienced Greenville probate attorney. After-hours appointments are available.