August 16, 2017
By Rachel Young Fields, special to Business in Savannah
A power of attorney is a legal document that grants authority to an individual (the agent or attorney-in-fact) to act on behalf of another individual (the principal). Powers of attorney will contain a list of powers that the agent is authorized to exercise on behalf of the principal. The agent is often authorized to make legal and financial decisions for the principal, including paying bills, opening and closing accounts, and buying and selling real estate. As a general proposition, the agent is only authorized to exercise her powers for the benefit of the principal and has fiduciary duties to act in the principal’s best interest.
If you become incapacitated without a power of attorney, the probate court may be called upon to appoint a conservator to handle your financial affairs. Appointment of a conservator likely will be more costly than putting a power of attorney in place before you need it, and, depending on the severity of your incapacity, you may be unable to provide input on who will serve as your conservator. Most people should consider having a power of attorney as a part of their estate plan.
Effective July 1, 2017, the law governing powers of attorney in Georgia has changed with the passing of the Georgia Uniform Power of Attorney Act (GUPOAA). Two policy considerations prompted the adoption of the GUPOAA.
The first is the protection of incapacitated principals, who are often elderly, from abuse. The GUPOAA is intended to curtail misuse of the agency powers. To that end, it gives a number of individuals the right to petition the court to review the power of attorney or the agent’s conduct. If the agent violates the GUPOAA, the court can require the agent to restore the lost value of the principal’s property to what it would have been if the agent had not violated the law, as well as pay attorneys’ fees and costs paid on the agent’s behalf.
Another apparent policy consideration in passing the GUPOAA was to encourage third parties to accept powers of attorney. Often banks and other institutions in Georgia have declined to accept powers of attorney. Instead, these institutions have required customers to complete institutional form documents or resort to appointment of a conservator by a court.
The GUPOAA includes provisions intended to make acceptance of powers of attorney that comply with the new law easier. It lays out the steps for presenting the power of attorney and indicates what additional documents can be requested by the entity being asked to accept the power of attorney. In order to further encourage third parties to accept powers of attorney, the GUPOAA provides protections for the third party that accepts the power of attorney in good faith. The third party is entitled to rely on certain facts and information without liability unless it has actual knowledge that the fact is untrue.
Powers of attorney executed before July 1, 2017 continue to be valid. However, the benefits afforded by the new law are only available for powers of attorney signed after July 1, 2017, so action is required to reap the benefits under the GUPOAA.
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