The revised Power of Attorney Statues went into effect here in Pennsylvania on January 1st of this year. A number of our clients have asked us what these new revised statutes mean — and whether they need to update their own Power of Attorney documentation.
The good news? If you executed your Power of Attorney prior to this year, your documents are most likely fine the way they are. Practically all of the revised statutes affect only documents executed on or after the effective date.
The purpose of a Power of Attorney is simple — it gives another person (or “agent”) the power to make financial and property transactions on your behalf. The revised Power of Attorney Statutes expand on the powers you give to your agent, including (but not limited to): creating, amending, revoking or terminating inter vivos trusts, creating or changing right of survivorships, making gifts (monetary or property), adding beneficiaries, delegating authority to third parties as granted under the (Power of Attorney) POA document, and overseeing all financial matters. The Power of Attorney document prepared by your attorney will clearly grant specific powers to your agent, according to your wishes.
It’s always a good idea to discuss any potential changes to your Power of Attorney document with legal counsel. Individual circumstances are unique, and your attorney will help you understand the pitfalls and ramifications of each power you grant to your agent.
One key revision to the statute deals with standard of care. “Standard of care” is a legal term described in Vaughn v. Menlove (1837) as whether someone “proceed[ed] with such reasonable caution as a prudent man would have exercised under such circumstances.”
When it comes to Power of Attorney, “standard of care” means your agent is expected to act in your best interest and in good faith when exercising any powers granted to him or her. The Pennsylvania State Legislature defined standard of care through changes in the statute. You’ll find this new definition on the Notice page that accompanies all Power of Attorney documentation.
A final word: we strongly encourage you to review all of your estate planning documents (Durable Power of Attorney, Living Will/ Advance Healthcare Directive and Last Will and Testament) after any major life change (marriage, divorce, birth of a child or a major purchase) to check for potential issues. If you have questions or concerns regarding the changes to the Power of Attorney statutes or your estate planning documents, do not hesitate to contact one of our experienced estate planning attorneys.
We’re here to help.
This article was written by Associate Attorney Jennifer M. Merx.