Uniform Power of Attorney Act, Chapter RCW

Transcription

1 Uniform Power of Attorney Act, Chapter RCW Megan S. Farr Ms. Farr is a member of Farr Law Group, PLLC, where her practice focuses on elder law and estate planning. She is a member of the Washington State Bar Association, Tacoma Pierce County Bar Association, King County Bar Association, and is admitted to the United States District Court for the Western District of Washington. Ms. Farr serves on the Washington State Bar Association Elder Law Section Executive Committee as Legislative Co-Chair. In 2010 her peers voted her a Rising Star in Washington Law & Politics magazine. Ms. Farr earned her law degree from the University of Washington in Prior to attending law school she worked in the United States Senate.

2 Washington s Power of Attorney Act has been in effect since January 1, 1985, codified at Chapter RCW. The Uniform Law Commission approved a new Uniform Power of Attorney Act ( UPAA ) in 2006 in order to mitigate the growing divergence among the various states treatment of powers of attorney and to provide additional safeguards to protect incapacitated persons. To date, 21 states have adopted the UPAA. 1 Beginning in 2009, the WSBA s Real Property, Probate & Trust Section and Elder Law Section analyzed the UPAA. It was concluded that the UPAA should be adopted in Washington with certain modifications. Senator Jamie Pedersen introduced the bill in January 2015, and Governor Inslee signed it into law on April 1, 2016, as Engrossed Substitute Senate Bill 5635 (ESSB 5635). It is codified at Chapter RCW. The law is effective January 1, See RCW The UPAA increases the usefulness of a durable power of attorney, includes elder abuse protections, clarifies the agent s, and protects third parties who deal with an agent, as outlined below. A. Increased Usefulness. 1. General Grant of Authority over Broad Subject Matter. Washington law has provided very few details about specific powers that fall within the scope of a general grant of authority under a power of attorney. Change: The UPAA details numerous grants of general authority. See RCW This provides the third party with a specific description of the scope of the agent s authority as defined in the statute, allowing power of attorney documents to be shortened, more readable, and simplified. 2. General Authority over the Principal s Health Care Matters. Washington s law regarding health care agents under a power of attorney is retained in the UPAA. Addition: The UPAA brings Washington s power of attorney laws into compliance with the federal Health Insurance Portability and Accountability Act (HIPAA), which makes the necessity of a specific HIPAA waiver unnecessary. See RCW (4) and (3). 1 Alabama, Arkansas, Colorado, Connecticut, Hawaii, Idaho, Iowa, Maine, Maryland, Montana, Nebraska, Nevada, New Mexico, Ohio, Pennsylvania, South Carolina, Utah, Virginia, Washington, West Virginia, and Wisconsin. 2

3 B. Elder Abuse Prevention. 1. Heightened Formality to Execution of a Valid Power of Attorney. Under Washington law, a power of attorney has been valid if in writing and signed by the principal. See RCW (3). There has been no required safeguards of witnesses or notaries. Change: The UPAA requires formalities of either a notary or disinterested witnesses in the execution of a power of attorney to help ensure that the principal is not subject to undue influence or duress. See RCW (1). 2. Express Language Must be Used to Grant an Agent Specific Authority over Certain Subject Matters. The UPAA retains current Washington law in regard to requiring specific authority to alter the estate plan of the principal: (1) An agent under a power of attorney may, subject to the requirements of RCW , and in particular RCW (2)(f), do the following on behalf of the principal or with the principal's property only if the power of attorney expressly grants the agent the authority and exercise of the authority is not otherwise prohibited by another agreement or instrument to which the authority or property is subject: (a) Create, amend, revoke, or terminate an inter vivos trust; (b) Make a gift; (c) Create or change rights of survivorship; (d) Create or change a beneficiary designation; (e) Delegate some but not all of the authority granted under the power of attorney, except as otherwise provided in RCW (1); (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) Exercise fiduciary powers that the principal has authority to delegate; (h) Exercise any power of appointment in favor of anyone other than the principal; 3

4 (i) Create, amend, or revoke a community property agreement; (j) Cause a trustee to make distributions of property held in trust under the same conditions that the principal could; (k) Make any other provisions for nonprobate transfer at death contained in nontestamentary instruments described in RCW ; (l) Make health care decisions for the principal, or give informed consent to health care decisions on the principal's behalf. RCW (1). In addition, it retains Washington s current law allowing an agent to make transfers to any trust so long as it benefits the principal alone, and/or so long as the transfer is for the purpose of qualifying the principal for medical assistance or the limited casualty program for the medically needy, without a specific grant of authority. See RCW (2), (3). Addition: The UPAA emphasizes that any specific powers granted to an agent are subject to the general duty of an agent to preserve the principal s estate plan: (2) Except as otherwise provided in the power of attorney, an agent that has accepted appointment shall:... (f) Attempt to preserve the principal's estate plan, to the extent actually known by the agent, if preserving the plan is consistent with the principal's best interest based on all relevant factors, including: (i) The value and nature of the principal's property; (ii) The principal's foreseeable obligations and need for maintenance; (iii) Minimization of taxes, including income, estate, inheritance, generation-skipping transfer, and gift taxes; and (iv) Eligibility for a benefit, a program, or assistance under a statute or rule. RCW (2)(f). 4

5 3. Exoneration of an Agent from Liability. Washington law has not allowed a principal to exonerate an agent in advance from a breach of duty. Change: The UPAA allows a principal to exonerate an agent from liability for a breach of duty, so long as the breach was not committed dishonestly, with an improper motive, or with gross negligence to the purpose of the power of attorney or the best interest of the principal, or, if such an exoneration was inserted as a result of an abuse of a confidential or fiduciary relationship with the principal. See RCW Explicit Fiduciary Duties of Agent. Washington statutes have not provided a clear list of an agent s duties. Addition: The UPAA codifies case law (see Moon v. Phipps, 67 Wn.2d 948, 955, 411 P.2d 157 (1966)) and explicitly enumerates a clear list of fiduciary duties that require an agent to act in accordance with the principal s reasonable expectations to the extent they are known, and otherwise in the principal s best interest. See RCW (1). It also enumerates default duties that may be modified, including an agent s duty to act loyally and impartially, to keep a record of all transactions, cooperate with a health care agent, and to preserve the principal s estate plan. See RCW (2). Change: The UPAA limits the request for an accounting from a guardian or personal representative to information that reasonably relates to the duties of the guardian or personal representative. See RCW (9). 5. Modification of the Definitions of Incapacitated and Power of Attorney. Washington law has allowed the principal to define disability or incompetence. RCW (1). Change: The UPAA defines incapacity as follows: (5) Incapacity" means inability of an individual to manage property, business, personal, or health care affairs because the individual: (a) Has an impairment in the ability to receive and evaluate information or make or communicate decisions even with the use of technological assistance; or 5

6 (b) Is: (i) An absentee, as defined in chapter RCW; or (ii) Outside the United States and unable to return. RCW (5) Change: The UPAA also requires the term Power of Attorney be used in the authorizing document. See RCW (7). 6. Requirements for Judicial Review of an Agent s Actions. The UPAA is consistent with current law regarding who may file a petition for court review and for what reasons. See RCW Addition: It also provides notice requirements and attorneys fees, which are procedural safeguards consistent with TEDRA procedures to help avoid frivolous requests for court interventions. See RCW (3) and (5). C. Clarification of Agent s Role. 1. Authority Terminated upon Filing of Dissolution of Marriage or Domestic Partnership, and Automatically Reinstated if Dissolutions is Withdrawn. Under Washington law the power of attorney granted to a spouse or domestic partner has not been revoked until the final decree of marriage, declaration of invalidity, or legal separation. See RCW Change: The UPAA provides that a spouse s authority as agent is terminated upon the filing of a dissolution or separation and is automatically reinstated if the dissolution is withdrawn or dismissed. See RCW (2)(c) and (3). 2. Coagents Must Exercise their Authority Jointly. There has been no express provision applying to coagents under Washington law. Change: The UPAA requires coagents to act jointly unless the Principal grants independent authority to each agent. Further, the UPAA allows a coagent to delegate authority to the other coagent. See RCW (1). 3. Power of Attorney Terminates once a Court Appoints a Guardian. Once a guardian (full or limited of the person and/or estate), the agent s power of attorney continues in effect but the agent must account to the guardian and the guardian has the authority to modify or terminate the power of attorney under current Washington law. RCW (1). 6

7 Change: The UPAA terminates an agent s authority under a power of attorney unless the court specifies otherwise, and in the case of a limited guardianship, the agent s power continues except to the extent ordered by the court. See RCW (2) and (3). D. Third Parties. 1. Agent s Liability for Delegation to Third Parties. Washington law has been silent on the subject of the liability of an agent who delegates or hires another to assist with the exercise of his or her authority. Change: The UPAA does not hold an agent liable for the discretionary acts of a third party engaged by the agent to act on behalf of the principal. The agent cannot be held liable for the acts of someone the agent delegates authority, unless it was a discretionary act which the agent would have been liable for. See RCW (7) and (8). 2. Resignation of Agent. Washington law has been silent on the subject of how an agent may resign. Change: The UPAA specifies how and to whom an agent may give notice of his or her resignation. See RCW Requirements of Third-Parties asked to Accept a Power of Attorney. Washington law has been silent on a number of issues involving third-parties: The mechanism or timeline for a third-party to request a certification of a power of attorney and then accept or reject the power of attorney; What constitutes a justifiable basis for a third party presented with a power of attorney and accompanying certificate to still reject the power of attorney; and The liability of the third party for wrongfully failing to honor a power of attorney. Change: The UPAA specifies the procedures and timelines that a third party presented with a power of attorney must follow if they intend to demand a certification, a description of the circumstances under which a third party presented with a certification may still reject the power of attorney, and a third party s liability for attorneys fees if they wrongfully reject a power of attorney. 7

8 (1) Except as otherwise provided in subsection (2) of this section: (a) A person shall either accept an acknowledged power of attorney or request a certification or a translation no later than seven business days after presentation of the power of attorney for acceptance; (b) If a person requests a certification or a translation, the person shall accept the power of attorney no later than five business days after receipt of the certification or translation; and (c) A person may not require an additional or different form of power of attorney for authority granted in the power of attorney presented. (2) A person is not required to accept an acknowledged power of attorney if: (a) The person is not otherwise required to engage in a transaction with the principal in the same circumstances; (b) Engaging in a transaction with the agent or the principal in the same circumstances would be inconsistent with federal law; (c) The person has actual knowledge of the termination of the agent's authority or of the power of attorney before exercise of the power; (d) A request for a certification or a translation is refused; (e) The person in good faith believes that the power is not valid or that the agent does not have the authority to perform the act requested, whether or not a certification or a translation has been requested or provided; or (f) The person makes, or has actual knowledge that another person has made, a report to the department of social and health services stating a good faith belief that the principal may be subject to physical or financial abuse, neglect, exploitation, or abandonment by the agent or a person acting for or with the agent. (3) A person that refuses in violation of this section to accept an acknowledged power of attorney is subject to: (a) A court order mandating acceptance of the power of attorney; and 8

9 (b) Liability for reasonable attorneys' fees and costs incurred in any action or proceeding that confirms the validity of the power of attorney or mandates acceptance of the power of attorney. RCW