OUTSTANDING DRAFTING ISSUES
The Interim Draft of the UPOAA dated January 19, 2005 was reviewed by
the Joint Editorial Board for Uniform Trust and Estate Acts as well as by the
Uniform Laws Subcommittee and State Laws Committee of ACTEC. Comments from the JEB and ACTEC are noted
after each discussion item with additional comments on other issues summarized
at the conclusion of each article. Following
each issue is also a Reporter’s comment or recommendation. If a substantive change was made in the April
1, 2005 draft with respect to an issue, the change is described in this memo.
Article 1
General Provisions and Definitions
Issue #1:
Sec. 107/ new 107
& 108. Power of Attorney Executed in Another State or Country;
Pre-existing Powers of Attorney; Interpretation.
Section 107 in the Jan. 19, 2005 draft is modeled loosely on UTC 403. Assess whether a simpler approach would be better in the context of powers of attorney. Unlike trusts which generally include important governing principles in the express terms of the trust document, POAs often rely on the default rules of the jurisdiction where drafted. The current 107 may make it difficult to ascertain the default rules for powers executed outside of the state where presented. The typical portability provisions for foreign durable powers recognize as valid POAs executed in another state or jurisdiction in compliance with the law of that state or jurisdiction. They also recognize as valid powers that were validly executed in the adopting state before adoption of a new act.
JEB Comments: There was consensus
that a simpler approach should be adopted and that the scope of authority in a POA
should be controlled by the principal’s intent as ascertained from the face of
the document and any default provisions upon which the POA relies. However, authority granted in another
jurisdiction should be honored only to the extent that it does not offend
public policy in the state where the POA is presented.
ACTEC Comments: There was
general agreement with the JEB views on this issue with the additional
suggestion that “validity” and “interpretation” be covered in separate
provisions. With respect to validity, it
was suggested that a POA be treated as valid if it complied with the law of the
jurisdiction where executed or the law of the jurisdiction in which the
principal intended that it be used.
Reporter’s Comment: Former
Section 107 is redrafted in the April 1, 2005 draft as Sections 107 and 108 for
committee review.
Issue #2:
Sec. 108/ new 201. Authority of Agent.
Should subsection (a) dealing with general grants of authority be moved back to Article 2? What does “general authority” mean vis-à-vis the powers specifically defined in Article 2, Sections 203 - 217?
JEB Comments: After considerable
discussion, the board expressed consensus that all of Sec. 108 should be moved
back to Article 2, and that a legislative note in the prefatory comments to the
Act could set forth the modifications that ought to be made if a jurisdiction
elects to enact only Article 1 of the new act.
It was also recommended that the language in Sec. 108(a) of the Jan. 19,
2005 draft be clarified to indicate that a general grant of authority includes
all of the defined powers in Article 2 with the exception of those which
require a specific grant of authority pursuant to Sec. 108(b). It was also recommended that the last
sentence of Sec. 108(a) be deleted from the section and covered instead in the
comments. Regarding Sec. 108(b), it was
recommended that subsection (1) be modified as follows: “create, modify, or revoke an inter vivos
trust.
ACTEC Comments: There was general agreement with the JEB views on this
issue with the additional suggestion that Section 108(b)(2)(the authority to
fund a trust not created by the principal) be deleted because
108(b)(3)(authority to make a gift) really covers this situation. (Consider—to fund a trust not created by the
principal or the agent one would need the authority to make a gift)
Reporter’s Comment: Former
Section 108 is now moved back to Article 2 in the April 1, 2005 draft. The language of former Section 108(b)(1) is
revised as recommended and former Section 108(b)(2) is deleted. These changes are subject to committee
review.
Other Comments from
JEB Members on Article 1:
Issue #3:
Sec. 106. Creation.
A question was raised as to whether Sec. 106 would be
sufficient to protect a bank that relies on an apparently notarized signature which
was in fact forged. (cf. In re Estate of
Davis, 632 N.E.2d 64 (
Reporter’s Comment: Section 119(a) already addresses this concern.
Issue #4:
Section 112. Co-Agents and Successor Agents.
Should clarification be made in the statute or comments that the requirement of “majority consent” when there are only two agents results in a requirement of unanimous consent?
Reporter’s Comment: The style
committee also suggested that we address this. Section 112(a)(1) in the April 1, 2005 draft
is revised accordingly for committee review.
Issue #5:
Sec. 114(f) & (g)/
new 114 (g)
Strong consensus was expressed that the standard of liability for the agent should be the same whether the agent employs another person on behalf of the principal or delegates the agent’s discretionary authority to another person pursuant to former Sec. 108(7). The standard recommended is that stated in former Section 114(f), with the suggestion that the drafting committee consult Sec. 9 of the Uniform Prudent Investor Act. It was also suggested that the phrase “delegating authority” in former subsection (g) be re-worded.
Reporter’s Comment: Former sections
114(f) and (g) are revised and combined as Section 114(g) in the April 1, 2005
draft for committee review.
Other Comments from
ACTEC on Article 1:
Issue #6:
Sec. 112. Co-agents and Successor Agents.
Section 112 should state that persons may rely on an agent’s certification as to the unavailability of a predecessor or co-agent.
Reporter’s Comment: Section
119(b) already addresses this concern.
Article 2
Powers
Issue #7:
Sec. 211/ new 212. Claims and Litigation.
Should the language be revised to clarify that this list is not exclusive?
JEB: Clarify in comment.
ACTEC: The provision should be
revised to clarify that the list is not exclusive.
Reporter’s Comment: Former Section
211(now 212) is revised in the April 1, 2005 draft, subject to committee
review, to include “including but not limited to” language in subsection (1). The accompanying comments will also clarify
that the list of actions in the provision is not exclusive.
Issue #8:
Sec. 212/ new 213. Personal and Family Maintenance.
Should this section be revised to clarify that payment of educational and medical
expenses under IRC 2503(e) (including contributions to 529 plans) is included?
JEB: While the board did not
believe it is necessary to specifically mention IRC 2503(e) in the statute, it
was suggested that the proposed language be reviewed, and revised if necessary,
to make certain that any individuals customarily supported by the principal
would be included within the scope of the power (e.g., parents and adult
children). The comment should indicate
that payments under this section are not subject to any limitations contained
in the authority to make gifts, but that such payments may be subject to gift
tax consequences. See also UPC Sections
2-109 and 2-609 regarding acknowledgment of an advancement or ademption by
satisfaction.
Reporter’s Comment: Former Section 212(1) (now 213(1)) is revised in the
April 1, 2005 draft for committee review.
Clarifying remarks will also appear in the commentary.
Issue #9:
Sec. 216/ new 217. Gifts.
Should this section be revised to clarify that split gift making pursuant to IRC 2513 and gifts under the marital exclusion are permitted? What about contributions to 529 plans?
JEB: Yes to gift splitting and
529 plans. Language should also be
revised to clarify that the reference to the annual exclusion is for the
purpose of clarifying the default limit on gift amounts to both individuals and
organizations. Comments should clarify
that Section 216 does not limit authority under 212 (Personal and Family
Maintenance). The comments should also
indicate that gifts to individuals may include gifts to custodian accounts.
ACTEC: Clarify that Section 216 does not constrain
529 plans under Section 212.
Reporter’s Comment: The committee should consider this issue
further to determine what revisions are in order.
Other Article 2 Comments:
Issue #10:
Consider whether the language in any of the powers sections needs to be revised to address authority to deal with specific governmental agencies such as the bureau of motor vehicles, US Postal Service, and Veteran’s Administration.
Reporter’s Comment & Recommendation: No significant comments were received. Former Section 202(8) (now 203(8)) currently
provides that an agent has authority to “prepare, execute, and file a report,
or other document the agent considers desirable to safeguard or promote the
principal’s interest under a statute or governmental regulation.” Section
203(9) was added to the April 1, 2005 draft to clarify that an agent also has
authority to: “communicate with any
representative or employee of a government, governmental subdivision, agency or
instrumentality on behalf of the principal”.
This revision is subject to committee review.
Other Comments from
JEB members on Article 2:
Issue #11:
Sec. 202(3)/ new
203(3):
Jim Wade offered revisions to the last phrase in Section 202(3) as follows:
. . .including creating, at any time, a schedule listing some or all of the principal’s property and attaching it to the power of attorney;
Reporter’s Comment: Section
202(3) in the April 1, 2005 draft is revised accordingly for committee review.
Issue #12:
Sec. 207/new 208:
Fred Miller suggested that the drafting committee revisit the language of Section 207 to determine whether it adequately covers electronic transactions.
Reporter’s Comment: While the
language of former Section 207/ new 208 is probably sufficiently broad, the
words “electronic funds transfer” were added to Section 208(5) and “electronic
transaction authorization” to Section 208(11) for the committee’s review.
Article 3
Statutory Form Power of Attorney
Issue #13:
Important Information
Section:
Should this section include any of the following:
1) advice that the POA should be kept in an accessible place, 2) that the agent should be informed of the designation and given a copy of the POA, 3) that a copy of the POA has the same force and effect as the original, and 4) an admonition that powers granted to the initial agent may not be suitable for successor agents?
JEB & ACTEC: No specific
comments were made with respect to the foregoing questions. At the ACTEC meeting it was suggested that
the phrase “If your agent can no longer act for you” be clarified to read “If
your agent is unable or unwilling to act for you. . .”
Reporter’s Comment and Recommendation: The ACTEC clarification is
adopted in the April 1, 2005 draft for committee review. The committee should consider whether the benefit
of including any of the other suggestions outweighs the detriment of added
length to the form.
Isssue #14:
Body of Form:
Should the form include options for creating a springing power of attorney or a non-durable power of attorney?
JEB: NO as to springing powers; regarding
non-durable powers, perhaps the second sentence in the Important Information
Section should include at the end “unless otherwise provided” or words to
similar effect.
ACTEC: Include in a comment
sample instructions for creating a springing power of attorney.
Reporter’s Recommendation:
Include instructions for creating a springing power of attorney in the
comment; the committee should consider whether the form should include the
“unless otherwise provided” language suggested by JEB for non-durable powers.
Other Comments from
ACTEC Regarding the Body of the Form:
Issue #15:
Consider adding a Guardian nomination provision to the body of the form.
Reporter’s Comment: A draft
provision is included in the April 1, 2005 draft for committee review.
Issue #16:
Important Information
for Agent:
Should this section include an admonition to stop acting on behalf of the principal once the agent learns of any event of revocation or termination of the power of attorney or the agent’s authority?
JEB: YES
ACTEC: No Comment
Reporter’s Comment: A draft
provision is included in the Important Information for Agent section of the
April 1, 2005 draft for committee review.
Other Comments:
JEB: There was considerable
discussion about the two different formats used for Grant of General Authority
versus Grant of Specific Authority. Some
believed that using different methods would be confusing for the
layperson. Another suggestion was to
require both crossing out and initialing of deleted powers in the Grant of
General Authority Section. Larry
Waggoner suggested simplifying the first sentence under Grant of Specific
Authority by replacing the phrase “Neither my agent nor a successor agent may
do” with the phrase “My agent MAY NOT do”.
A question was also raised concerning the Addendum and whether it would
be confusing to the layperson.
ACTEC: It was suggested that the
Addendum was potentially confusing and that it should be deleted. It was also suggested that the word
“fiduciary” be deleted from the Important Information for Agent section because
the term is not layperson friendly and we do not use the term in Section 114
Agent’s Duties.
Reporter’s Recommendation: The
committee should consider, hopefully for the last time, the prudence of the
methods for granting general and specific authority in the form. The suggestions to simplify the first
sentence in the grant of specific authority section, to delete the Addendum,
and to delete the word “fiduciary” have been adopted in the April 1, 2005 draft
for committee review.
Article 4
Item # 17:
Miscellaneous Provisions
Section 404. Effect on Existing Powers of Attorney.
This section is modeled after UTC 1106. Analyze whether this approach is applicable in all respects to powers of attorney.
No comments were received on this issue. The committee should review this at the
spring drafting committee meeting.