July 14th, 2016

Announcing Changes to Power of Attorney Laws

By signing Senate Bill 1104 into law on July 8th, Pennsylvania Governor Tom Wolf instituted amendments to laws regarding powers of attorney. The changes, for the most part, seem to be technical clarifications, however, they are worthy to note.

Generally, a Power of Attorney (POA) is a document granting authority to a person or “agent” to make legal and financial decisions on behalf of an individual (“principal”) who may be deemed unfit or incapable of doing so. Similarly, a Health Power of Attorney (HCPOA) grants authority to a named agent to make health care decisions on behalf of the principal.

This new law will be effective as of January 1, 2017, except for one change that is effective immediately. The immediate change relates to revocation of a health power of attorney. The law now allows for the court to revoke an HCPOA and requires the court’s approval if the agent requests a revocation.

Here are some of the other relevant changes that will be effective in 2017:

  • A person signing a POA on behalf of a principal may no longer sign by mark (something other than a true signature of a name).
  • Agents are only allowed to act in accordance with certain dollar limits set by the new law with regard to gifts, unless the POA specifically contains language granting the agent power to make gifts. The gift limitations correlate with the annual gift tax exclusion amounts.
  • Agents may only gift property if they are specifically aware of the principal’s wishes or the agent determines the gift is in the best interest of the principal. The law provides relevant considerations in making gifts including the nature of the property, maintenance obligations, applicable taxes, and more.
  • Agents are now specifically authorized, if so provided in the power of attorney document, “to provide personal and family maintenance” so that an agent may specifically be empowered to provide for the health, education, maintenance, and support in order to maintain the customary standard of living of the principal’s spouse, minor children, and individuals that the principal customarily supported and intends to support. This power is in addition to and not limited by the authority of an agent’s power to make gifts.
  • Agents are now specifically authorized, if so provided in the power of attorney document, to “operate a business or entity” on behalf of the principal. The agent may be empowered to continue and participate in the operation of a business or entity in which the principal holds an interest, change the form of ownership of a business, and be entitled to compensation for managing, supervising, and engaging in the operation of a business.
  • POA’s meaning and effect is determined by the jurisdiction indicated in the POA. If no jurisdiction is named, the laws of the jurisdiction in which the POA was executed will apply. However, a court having jurisdiction may decline to exercise jurisdiction should it deem that a different court would be a more appropriate forum.
  • POA’s must be executed in the same jurisdiction as the main residence of the principal.

One to look out for: House Bill 665 may also institute additional changes to powers of attorney, including clarifying the exemption of commercial powers of attorney, among others. This bill has not yet been signed into law.

If you have questions regarding your POA or the POA of a loved one, call one of our estate planning and elder law attorneys, today: 610.820.5450

Thomas A. Capehart regularly counsels families on their estate planning documents, providing knowledgeable advice for a reasonable fee. Contact Tom directly to review your POA at 610.820.5450 or tcapehart@steve.framework30a.com.