Powers of Attorney are powerful and potentially risky documents. A person signing a power of attorney (the “Principal”) is delegating certain authority listed in the power of attorney to another person (the “Agent”). Properly drafted, a power of attorney can be a useful tool in dealing with incapacity or absence. However, persuading banks, title companies, or other institutions to accept the power has always been somewhat difficult.
The Utah Legislature recently adopted the Uniform Power of Attorney Act, which became effective on May 10, 2016. This Act sets forth a detailed framework for powers of attorney that holds the promise of greater acceptance. Under the Act, an institution may request certain information from the Agent attempting to use a power of attorney. Once provided, the institution is required to accept the power of attorney, and can be held liable for attorney fees for refusing to accept the power if the Agent must seek a court order mandating acceptance.
The Act also seeks acceptance through the adoption of a statutory form power of attorney. The form power of attorney provides a series of powers that can be adopted into the power of attorneys simply by initialing next to a brief description. The Act sets forth the details of each power in separate sections. By using a uniform statutory form power, it is believed that institutions will become comfortable with the form and its terms and more readily accept the power. The statutory form power is not required and other forms may still be used.
The risk with the statutory form power of attorney also lies in its simplicity. By simply initialing a box, a Principal can authorize the Agent to amend his or her estate plan, make gifts, and change beneficiary designations. Great care should always be used when executing a power of attorney. Though the statutory form seems simple, it can have far-reaching implications for taxes and your estate planning and should not be used without the assistance of a qualified attorney.
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