Starting on July 1, 2017, the new Uniform Power of Attorney Act (the “UPOAA”) governs new financial Powers of Attorney (“POAs”) in the state of Georgia. In this blog post, we will provide a review of the function of a POA, and outline some of the changes made to Georgia law under the UPOAA.
Why Have a POA?
A POA is a document in which one party (the “Principal”) grants authority to another party (the “Attorney-in-Fact” or “Agent”) to act for the Principal in making financial decisions.
If you can no longer manage your finances, and you do not have a valid POA, it may be difficult or impossible for someone else to ensure that your bills are paid and that your larger financial decisions are made. If you are incapacitated for any length of time, someone may need to petition your county’s probate court to become your conservator. Conservatorship proceedings can be stressful, time-consuming, and expensive. In contrast, if you have a valid POA in place, you may be able to avoid the need for conservatorship. Thus, avoiding all of the burdensome court supervision and rules that come with conservatorship.
Changes to Georgia Law Under the UPOAA
The UPOAA changes much of Georgia’s laws regarding POAs, and seeks to address some particular issues. One major issue under the old law was that there was no way to compel a bank or another financial institution to recognize a financial Power of Attorney. Another issue- one of constant concern- is that a “bad actor” Agent could misuse a POA for a Principal who lacks capacity. While it is impossible to eliminate such concerns, there are new provisions regarding how a POA must be signed, how and when it can be revoked, and what happens when an Agent does not comply with all of his or her fiduciary responsibilities to the Principal for whom they serve.
The new UPOAA reinforces several mandatory duties of Agents: (i) the duty to act in the principal’s best interests in accordance with the principal’s reasonable expectations, to extent the principal’s expectations are actually known; (ii) to act in good faith; and (iii) to only act within the scope of authority granted in the POA.
New POA Form & Rules Compelling Acceptance by Third Parties
At the core of the UPOAA is a new statutory form power of attorney. While strict adherence to this new POA form is not required, a POA executed on or after July 1, 2017 must either use the actual statutory form or a form that “substantially reflects” the language of the statutory form to enjoy the compelled acceptance. Banks and any other institutions can be compelled to accept a newly executed POA that substantially reflects the new statutory form. If a third party rejects a POA, it has seven days to request an Agent’s certification, translation into English, or attorney opinion. Once one or more of these are provided to a third party, a third party then has up to five business days after receiving these documents to accept the POA or else they are required to report it to police as possible fraud. Fraud may include a POA that an Agent is trying to use for unlawful purposes, or in situations where a third party has a good faith belief that the POA was executed fraudulently, such as the Principal lacked the capacity to sign such a document.
So What Should You Do?
Because the new statutory POA form lacks the detail and breadth of the POAs that we prepare for the clients we serve, we plan to use the new statutory form as a point of departure. Our POA substantially reflects the statutory language with additions or modifications that serve our clients’ specific needs.
If you already have a valid POA in place, don’t worry: POAs that were valid in Georgia before July 1, 2017 will continue to be valid. However, those who had POAs executed before that date, especially if they are more than a few years old, should strongly consider having updated POAs prepared to enjoy the compelled acceptance by third parties.
If you have questions about how the new UPOAA provisions impact you, a family member, or someone for whom you serve as Agent under a Financial Power of Attorney, please call us at (770) 854-0688.