Peacock Tales • Fall 2014
By Eva Ahern
House Bill 1429 was passed by the state legislature and signed into law by Governor Corbett on July 2, 2014. Act 95, as it is now known, revises Pennsylvania’s law governing Powers of Attorney. The majority of the substantive provisions contained in Act 95 do not take effect until January 1, 2015. Of particular importance are the changes regarding the duties of an agent, actions requiring express grants of authority and third party acceptance.
A power of attorney authorizes someone to act financially on your behalf. The new law provides that an agent must act in accordance with your reasonable expectations to the extent they are known by the agent. If your reasonable expectations are unknown, then an agent must act in your best interest.
Act 95 also sets forth certain duties that a principal may waive or modify. Some of the duties that can be waived or modified include, “act loyally for the principal’s benefit,” keep the agent’s funds separate from the principal’s funds, keep records of all receipts, disbursements and transactions made on behalf of the principal, cooperate with a person who has authority to make health care decisions, and preserve the principal’s estate plan.
Under the new law, a Power of Attorney must specifically grant certain powers to the agent, or the agent will not be authorized to perform these duties on behalf of the principal. Such powers include: the power to create, amend, revoke or terminate an inter vivos trust, make gifts, create or change rights of survivorship, create or change beneficiary designations, delegate authority granted under the Power of Attorney, waive the principal’s rights to be a beneficiary of a joint and survivor annuity, exercise fiduciary powers that the principal may delegate and disclaim property, including a power of appointment.
The new statute also provides greater protection to third parties who rely on the Power of Attorney. Additionally, before accepting a Power of Attorney, a third party may request additional documentation including a translation of the document and/or an opinion by an Attorney to determine if the agent is acting within the parameters of the document.
Act 95 also changes the requirements to the form and execution of a Power of Attorney. It requires them to be witnessed by two, uninterested parties, and signed in the presence of a notary. The Notice, which the principal must sign, as well as the Acknowledgment, which the agent must sign, have also been modified. These changes pertaining to the form and execution apply only to Powers of Attorney executed on or after January 1, 2015.
While many of the powers we have prepared for clients over the last few years already incorporated many of the new requirements, others will need to be added. However, there is no need to rush in to get new powers prepared; the Act expressly recognizes the older ones as still valid. So as your circumstances change, requiring changes in your estate planning documents, you might notice changes in your new Power of Attorney as well.
Peacock Keller & Ecker, LLP • 70 East Beau Street • Washington, PA 15301 • 724-222-4520