The Atlanta Lawyer October 2017 | Page 18

LEGAL MINUTE
Georgia ' s Uniform Power of Attorney Act
Walter N. Cohen Cohen & Caproni, LLC wcohen @ cohenandcaproni. com
Legislation dealing with financial powers of attorney(“ POAs”) known as the“ Uniform Power of Attorney Act”( the“ Act”) was signed by the Governor earlier this year and became effective on July 1, 2017. Although the initial impetus for such legislation was a concern for abuses which have occurred through actions taken by agents under POAs, there had also been an increasing inability of agents to secure approval of third parties( such as banks and other financial institutions) regarding the use of POAs which were not executed using the financial institutions’ own form documents. This Act attempts to deal with both of these issues.
As an initial matter, the new law does not mandate the use of the new POA form, in order for a POA to be enforceable or honored. Existing POAs will still be valid, although their acceptance may still be refused by institutions who are not comfortable with validating a preexisting POA for which they have some concern, either with regard to validity in its execution or with regard to the breadth of authority over assets held by such institution. The Act will not apply to any actions taken under a POA that was executed prior to July 1, 2017. Thus, it is advisable for practitioners to consider reviewing existing POAs, in order to make a determination as to whether new POAs in compliance with the new law should be prepared. Of course, to the extent that the principal who executed the existing POA is now incapacitated or incompetent, it will not be possible to implement a new POA. The Act provides a statutory form for
the new POA. The statutory form can be relied upon in drafting POAs which are intended to comply with the new law. Although use of the new form is not mandatory, it is recommended that the statutory form be used in substantially the form set out in the statute. Over time, it is likely that institutions and other third parties will become familiar with the statutory form which should make it easier to secure third party acceptance of such POAs.
The form is divided into two section dealing with different types of powers. The first section of the new form regarding powers describes areas of general authority which must be approved and initialed by the principal, in order to grant such authority to the agent. The powers cover real property, tangible personal property, stocks and bonds, commodities and options, banks and other financial institutions, operation of entity or business, insurance and annuities, estates, trusts, and other beneficial interests, claims and litigation, personal and family maintenance, benefits from governmental programs or civil or military service, retirement plans, and taxes. If the principal desires to give the agent authority in all of these areas, he or she can initial one space which covers“ all preceding subjects.” Otherwise, each area of authority must be separately initialed.
In addition to the areas of general authority, the second section of the form includes areas of specific authority. These powers are also known as“ hot powers” since their exercise could significantly change the use and disposition of the principal’ s assets. Each area of specific authority must be initialed by the principal, in order to grant the agent authority to act with respect to such matters. These powers, if granted, can cause assets to be transferred from( or bypass altogether) the principal and thus merit special attention when deciding whether to grant them to the agent. The areas, if initialed, will allow the agent to( a) create, amend, revoke, or terminate an inter vivos trust,( b) make a gift, subject to the limitations of O. C. G. A. § 10-6B-56 and any special instructions in the power of attorney,( c) create or change rights of survivorship,( d) create or change a beneficiary designation,( e) authorize another person to exercise the authority granted under the power of attorney,( f) waive the principal ' s right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan,( g) access the content of electronic communications,( h) exercise fiduciary powers that the principal has authority to delegate, or( i) disclaim or refuse an interest in property, including a power of appointment.
As the areas of specific authority deal with situations in which the principal’ s assets and estate plan could be significantly affected or changed, it will be important that the attorney representing the principal explain in sufficient detail the consequences which each of these grants of specific authority may have. Unlike the general authority powers granted in the first section of the form( which can be authorized by simply
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