Peacock Tales • Winter 2017
In 2014, a series of changes to the Pennsylvania Power of Attorney Act significantly altered both the use and interpretation of powers of attorney. Practitioners were perplexed at several of the amendments and craved clarity as to how the changes should be interpreted. In October 2016, the Pennsylvania legislature amended several provisions of the Power of Attorney Act to address these concerns.
One of the amendments to the Act made in 2014 generally required all powers of attorney to be signed in the presence of two witnesses, and that the document be notarized or acknowledged. Although the 2014 Act exempted commercial powers of attorney from the requirement of two witnesses, it did not exclude the notarization or acknowledgement requirement. The 2016 amendments specifically except the notarization or acknowledgment requirements for commercial powers of attorney.
In addition, the 2014 Act imposed a duty on all agents acting under a power of attorney to act in the principal’s best interest. That duty seems natural with respect to general powers of attorney. However, there are many instances in which a commercial power of attorney is used for the purpose of acting against the principal’s interest. For example, a commercial power of attorney might authorize an agent to confess judgment against the principal when the principal has defaulted on a loan. The 2016 amendments provide that an agent under a commercial power of attorney is not subject to the duties imposed on agents in the context of general powers of attorney.
The 2016 amendments also give guidance to the court with respect to general powers of attorney. For instance, it is now clear that a court can assess costs of an agent’s accounting when it deems appropriate. Moreover, the Act now gives a court the option to decline to exercise jurisdiction over a matter pertaining to a power of attorney if it determines that to do so is not appropriate. The Act also now provides that the venue for a proceeding involving a power of attorney is the principal’s county of domicile or the county in which the principal is residing if in a long-term care facility.
The 2016 amendments refine the duties of agents with respect to powers involving estate planning. If expressly granted in the power of attorney, the agent may have the ability to disclaim certain interests to which the principal may be entitled. The amendments passed in October incorporate other provisions of the Probate, Estates and Fiduciaries Code to limit the types of disclaimers that may be made. In addition, agents are now charged with the duty to consider the principal’s estate plan when making a disclaimer. In all, the 2016 amendments go to great lengths to provide guidance to both the courts and attorneys with respect to the changes made in 2014. These clarifications will prove useful in determining not only the duties of an agent, but also the process by which an agent’s actions may be challenged.
Peacock Keller, LLP • 70 East Beau Street • Washington PA 15301 • 724-222-4520