10 Jul Georgia’s New Power of Attorney Statute — Significant Changes: the Good, the Bad, and the Scary!
Any estate planning attorney will tell you there are 3 basic components of every estate plan: (i) a valid Last Will & Testament or alternatively a Living Trust, (ii) a Health Directive and (iii) a regular Power of Attorney. As discussed in a prior article, one of the significant benefits of the latter two documents is the ability to avoid the expensive and time consuming process of guardianship and conservatorship in the event a person become incompetent or unable to make his or her own decisions.
But what happens if a person or entity refuses to honor or recognize a power of attorney!??
It does happen at times. And until just recently, there wasn’t really much that could be done about it. Fortunately, that changed when the Georgia Uniform Power of Attorney Act was substantially amended effective July 1 of 2017. However, some of the changes are potentially concerning to many estate planning attorneys and financial advisors, and one must be very careful in executing the new statutory form. More so than ever, it is important to seek the advice of competent estate planning counsel.
You may wonder, “why?”. It is after all a statutory form. Just print it out and sign it, right? WRONG. Please no!
First let’s look at the good news with the revised statute. The big news is that there is now a mechanism to force a financial institution to recognize the power of attorney. Indeed, in the event of a wrongful refusal to honor a valid power of attorney, the institution can be ordered to pay attorney’s fees for having to seek court enforcement. This is important, because prior to the law change, if a financial institution refused to honor an otherwise valid power of attorney, (as would occasionally happen), there was very little that could be done. The new law has provisions which can force these institutions to honor a power of attorney that is properly drafted and contains certain statutory language. (This should not be worrisome for financial institutions; they are afforded protections under the statute to encourage them to honor properly drafted and executed documents.)
Now, the bad news. Additional powers have been added to the statutory form that most estate planning attorneys and financial advisors would NOT want included nine out of ten times. Each of the specific powers should be reviewed, such as the power to make gifts or amend or revoke a revocable trust; these may be appropriate or inappropriate in any given situation.
Finally, what I would call the scary! The new powers go much further than the statutory form previously provided. For example, if you execute the form in full as it appears in the new statute, you will give your agent the powers to: change survivorship rights on accounts, change beneficiary designations (on life insurance, retirement accounts, etc.), and even the power to delegate authority to act to someone else (which is someone YOU did not choose!). As an estate planning attorney, those powers terrify me. It is a rare instance indeed, regardless of how much the maker trusts the agent, that I would encourage the grant of these powers. These new powers greatly multiply the potential for abuse, and it can completely and totally wreck a well implemented estate plan, separate from the fact that changes made under these powers can drastically alter the dispositive scheme of the person.