GEORGIA’S NEW STATUTORY POWER OF ATTORNEY BECOMES LAW JULY 1, 2017: WHAT YOU NEED TO KNOW
By: John Cleveland Hill, Esq. and Sarah Randal Watchko, Esq.
The General Assembly of Georgia passed and Governor Nathan Deal has signed a new law substantially overhauling financial Powers of Attorney (“POAs”), and the statute is effective July 1, 2017. This article will give a brief overview of the law and its impacts, but the article is not comprehensive and should not be taken as such. Individuals should seek the advice of their own legal counsel on this topic.
What is a POA and why is it important?
Let’s start with the basic concept. A POA is a written document wherein one person (commonly called the “principal”) gives power to another person (commonly called the “agent” or the “attorney in fact”) to “step into the shoes” of the principal regarding the principal’s financial and asset management and decision making.
A POA is especially helpful—if not vitally important—should you reach a point in life where handling your own affairs is difficult or completely impossible. This could be due to an accident or sudden illness. Think of those daily, monthly, and yearly tasks required to make your financial life run smoothly. If you could no longer care for those things yourself, someone needs to be able to do so for you. Traditionally, we use a POA for those tasks. In the absence of a POA, those that care about you will have little choice but to file an action in your local probate court to have someone appointed as “conservator”—what Georgia law calls a financial guardian. The conservatorship process can be costly, lengthy, and requires ongoing court supervision for the duration of your incapacity. Obviously the court supervised conservatorships provide an important role when someone does not have trustworthy people in their lives to serve as an agent under POA; for most, however, a POA will be a better choice. Having a POA executed is intended to thwart the need for a conservatorship.
What does the new law do differently? Protections and Ability to Enforce.
In recent years agents attempting to use POAs for the principal have been met with increasing resistance from certain third parties— in the author’s experience, this resistance has largely come from banks and other financial institutions. Banks and financial institutions have become so risk/liability averse that they have simply refused to follow the instructions of an agent under POA. The result is that clients who thought that they had completed thorough, thoughtful estate planning were left in sometimes dire circumstances and their agents were left unable to access or use their finances for the principal’s benefit.
Under pre-July 1, 2017 law, third parties could not be forced to accept the POA because, under theories of contract law, the third party was not a party to the contract—the POA was only between the principal and agent. Under the old law, there was very little, if any, recourse if a third party, such as a bank, refused to accept a POA.
The new statute provides significant protections for the third parties by providing that any person/entity may rely upon the validity of the POA unless that person has actual knowledge that the POA has been is invalid or has been terminated.
More importantly for our purposes here, however, the law creates the ability to force a third party to accept the POA if certain conditions are met. Here is what is required to force acceptance of the POA:
- The POA must be the statutory form or a document that “substantially reflects the language in the statutory form.
- The agent must present the POA to the third party and seek to use the POA with the third party (i.e., agent presents POA to principal’s bank and asks to be given access to the principal’s bank accounts).
- If the third party refuses to accept the POA, the third party has up to seven (7) business days to request either a certification from the agent, an English translation (if such is necessary), or an attorney’s opinion. If the third party requests any of these items, the agent must supply them to the third party.
- Certification of Agent is a notarized statement, under penalty of perjury, concerning the principal, agent, and the POA.
- Attorney’s Opinion is an explanation from an attorney regarding the POA.
- After the agent supplies the requested documentation, the third party has up to five (5) business days to accept the POA.
- Third parties may still refuse to accept the POA under certain circumstances: action requested is not required of the third party; action is against federal law; third party has actual knowledge that the POA or agent’s authority has terminated; where agent’s certification, English translation or attorney’s opinion have not been provided; good faith believe that the POA is invalid or agent lacks authority; or where the third makes or knows that another party has made a report to adult protective services concerning abuse of the principal.
If the third party refuses to accept the POA after compliance with the requirements of law by the agent and the third party does not have a valid, statutory reason for its rejection, then a court can be asked to rule on the validity of the POA and issue an order forcing the third party to accept the POA. The third party can also be forced to reimburse the principal for reasonable attorney’s fees and expenses in pursuing the enforcement. The court also has the ability to hold the third party liable for additional damages and other remedies.
This is an immense shift in Georgia law with regard to agents being able to care for their principals, and generally speaking, in families being able to care of each other during times of incapacitation.
What should you or your loved ones do now?
Although the new statute does not invalidate pre-July 1, 2017 POAs, the old law will still apply to the old POAs—in other words, there will be little or no ability to force acceptance of the POA. Individuals should strongly consider contacting their estate planning attorney to determine whether updating to the new statutory POA is advisable for them.
Copyright 2017; Hill & Watchko, LLC.