Utah's New Uniform Power of Attorney Act
Important provisions you need to know.
An article in a recent issue of Community magazine discussed steps that could be taken to help prevent elder financial abuse. Unfortunately, many of the reported cases of elder financial abuse in the United States are committed by family members and other trusted individuals.
A common tool for the perpetration of elder financial abuse is the durable power of attorney, a much-used estate-planning document. During last year’s legislative session, the Utah Legislature enacted the Utah Uniform Power of Attorney Act (effective May 10, 2016) in part to address the abuse issue.
Whether or not you already have a durable power of attorney, you should be aware of important provisions of the new law that affect when the power of attorney is effective, what powers are granted, allow use of a short form document and permit a service provider to disregard the power if financial abuse is suspected.
New Powers Effective Now
Powers of Attorney executed after May 10, 2016, are presumed to be immediately effective, unless there is specific language making the power of attorney contingent on the happening of a future event, such as your becoming incompetent. This means your agent has immediate authority to act for you even if you are still competent. Although it is common to give a spouse immediate authority to act for you, you should seriously consider whether you want to give someone other than your spouse immediate power to access your accounts or even transfer your property.
The new act still allows a “springing” power of attorney, which does not grant power until you are determined to be incompetent. Under the act, competency is determined in writing by a physician who concludes that you are unable “to manage property or business affairs because you: (a) have an impairment in the ability to receive and evaluate information or make or communicate decisions, even with the use of technological assistance; or (b) are missing, or detained (including incarceration in a penal system), or are outside the United States and unable to return.”
Preventing Financial Abuse
The act also provides that a person, such as an employee of a bank, is not required to accept an acknowledged power of attorney if that person makes, or has actual knowledge that another person has made, a report to the Division of Aging and Adult Services stating a good faith belief that the principal may be subject to physical or financial abuse or exploitation. This provision is specifically intended to help prevent elder financial abuse.
Don’t Use the Short Form
The new act provides for a statutory “short form” document, which you should avoid because the description of the powers given to the agent is described in the statute rather than spelled out in the document itself. This means the principal, agent and individual who is presented with the power of attorney by the agent most likely will not understand what powers are actually granted in the document because they are described in the statute and not the document itself.
Specific Grant of Authority
Under the act, certain powers require a specific grant of authority to the agent. Some of these include the authority to create, amend, revoke or terminate a trust established by the principal; to make a gift on behalf of the principal; to create or change rights of survivorship; and to create or change beneficiary designations. If you want your agent to have any of these powers, they must be specifically stated.
It is important to carefully read through your power of attorney, whether an existing document or new one, and make sure that you feel comfortable granting your agent the powers listed in the document. You should also review and discuss your power of attorney with your attorney.
David O. Parkinson is an attorney with the firm of Bennett Tueller Johnson & Deere (btjd.com). His practice includes estate planning, probate and contested estate matters.