We are wrapping up our review of Pennsylvania's revised power of attorney law. All of these changes were effective Jan. 1, 2015. Some of them are a little confusing, and those of us who have recently drafted or executed a power of attorney document may want to consult with an attorney to make sure all the revised i's and t's are dotted and crossed.
The revision eliminates the limits on the agent's authority to give gifts or to amend the principal's estate plan. It is important to note, though, that only agents who are a) specifically designated by the principal, or b) an ancestor, descendant or spouse of the principal may make gifts to himself or name himself a beneficiary in the principal's estate plan.
The agent is generally required to preserve the principal's estate plan, but there are exceptions. The new standard is "best interest" of the principal, and best interest is defined by several factors listed in the new law. Examples of factors are the principal's need for maintenance and the obligation to minimize taxes, including estate and inheritance taxes. If the principal does not want one or more of the factors to be considered, he or she may say so in the power of attorney document.
Finally, the new law addresses the issues of liability and standing. The limitations placed on the agent's liability are, for the most part, included in the notice and acknowledgement. Acting in good faith is key: In a challenge to an agent's act that benefits him, the court will assume he was acting in good faith.
Almost everything the agent does involves a third party -- a bank, a home health agency -- and there have been questions about a third party's liability for following the instructions in an invalid power of attorney. The new bill grants third parties immunity from prosecution under these circumstances if the invalid document was relied on in good faith.
The standing issue deals with an agent's accounting of his actions. The new law limits the authority to request an accounting to the principal or anyone or any institution with a fiduciary relationship with the principal. Family members do not automatically have standing.
Again, questions about your own situation should be directed to a trusted attorney.
Source: Legal Intelligencer, "Key Provisions of the New Power of Attorney Law: Act 95," Amy Neifeld Shkedy and Rebecca Rosenberger Smolen, March 6, 2015