The Utah legislature recently adopted the Uniform Power of Attorney Act (the “Act”). The Act became effective on May 10, 2016, and makes some significant changes to current Utah law. With its enactment, Utah joins 20 other U.S. States in enacting this uniform legislation, though Utah has made some non-uniform changes of its own. Here is a non-exhaustive list of a few of the key provisions of the Act.
Acceptance of Duty as Agent and Responsibilities
An agent under a power of attorney accepts appointment as an agent by exercising authority or performing duties as an agent. Once accepted, the agent must act in accordance with the expectations of the principal, act in good faith, act only within the scope of the authority granted, and comply with the terms of the power of attorney. Once the agent has accepted appointment, they must act loyally for the principals benefit, not create a conflict of interest, act with care, competence, and diligence, keep records of their conduct, and attempt to preserve the principal’s estate plan. However, under Utah’s version of the Act, an agent under a power of attorney has no general affirmative duty to act at all unless the power of attorney specifically provides otherwise. This non-uniform provision of the Act was intended to avoid the agent becoming a general conservator for the principal simply by taking some action under the power.
Acceptance of Power of Attorney by Third Parties
One of the more difficult issues with powers of attorney has been the reticence of third parties to accept the power. The Act attempts to remedy this by providing that a third party who refuses to accept a power of attorney (properly proved as provided in the Act) can be liable for the attorneys’ fees and costs incurred in a court action to confirm the validity of the power or mandate its acceptance by the third party.
Adoption of Statutory Form Power of Attorney
Power of attorney documents have become very lengthy due to the need to innumerate the specific powers of the agent in great detail. However, the Act creates a statutory form power of attorney that may be used instead. Rather than creating a lengthy list of powers, the form allows the principal to simply initial the general powers desired, and such powers are included by reference to the extensive statutory language setting forth the power in detail. This form power of attorney should be used with great care. Though the document is simple in form, its impacts can be far reaching. The authority granted by each provision should be carefully reviewed and considered. Legal counsel should be sought before executing any power of attorney since such powers can have significant tax and non-tax consequences.
Use of the Term “Agent”
Rather than using the more arcane “attorney-in-fact” designation for the holder of a power, the Act opts for the simpler and more descriptive term “agent.” Agent is a broader term and can encompass more than just an agent under a power of attorney. But calling them an agent makes clear that they must be working for someone (the “principal”), and that when the principal is deceased, the agent no longer has authority to act.
Reversing Presumption of Durability
Under the old law, the incapacity of the principal would cause the power of attorney to terminate, unless the power specifically provided that it does not terminate on incapacity. The Act reverses this presumption so that powers of attorney are effective even if the principal is incapacitated, unless the power provides otherwise.
In an attempt fraud, the Act requires the principal’s signature to be notarized in order to have a valid power of attorney. This is a non-uniform provision. Under the Uniform Act, notarization carries certain benefits, but is not required for a valid power.
Independent Authority of Co-Agents
If more than one agent is appointed to serve together, each agent may exercise its authority independently unless the power of attorney specifically provides otherwise. This provision likely goes against what most individuals believe. Best practice is to always specify the authority of co-agents under a power.
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Jeff B. Skoubye