D R A F T
FOR DISCUSSION ONLY
UNIFORM
POWER OF ATTORNEY ACT*
___________________________________________________
NATIONAL CONFERENCE OF COMMISSIONERS
ON UNIFORM STATE LAWS
___________________________________________________
Interim Draft Dated January 19, 2005
With Prefatory Note
Copyright © 2005
by
NATIONAL CONFERENCE OF COMMISSIONERS
ON UNIFORM STATE LAWS
_____________________________________________________________________________
*Name Change of act from Revised Uniform Durable Power of Attorney Act is subject to approval of the Executive Committee of the National Conference of Commissioners on Uniform State Laws. The ideas, concepts and conclusions set forth in this draft, including the proposed statutory language and any comments or reporter’s notes, have not been passed upon by the National Conference of Commissioners on Uniform State Laws or the Drafting Committee. They do not necessarily reflect the views of the Conference and its Commissioners or the Drafting Committee and its Members and Reporter. Proposed statutory language may not be used to ascertain the intent or meaning of any promulgated final statutory proposal.
DRAFTING COMMITTEE FOR THE
UNIFORM POWER OF ATTORNEY ACT
The Committee appointed by and representing the National Conference of Commissioners on Uniform State Laws in preparing this Power of Attorney Act consists of the following individuals:
JOHN P. BURTON, P.O. Box 1357, 315 Paseo de Peralta, Santa Fe, NM 87501, Chair
KENNETH W. ELLIOTT, 22nd Floor, City Place Building, 204 N. Robinson Ave., Oklahoma City, OK 73102, Enactment Plan Coordinator
DAVID M. ENGLISH, University of Missouri-Columbia School of Law, Missouri Ave. & Conley Ave., Columbia, MO 65211
THOMAS L. JONES, University of Alabama School of Law, University Station, P.O. Box 865557, Tuscaloosa, AL 35486-0050
NATHANIEL STERLING, Law Revision Commission, Suite D-1, 4000 Middlefield Rd., Palo Alto, CA 94303
RICHARD V. WELLMAN, University of Georgia School of Law, Athens, GA 30602
STEVE WILBORN, 306 Tower Drive, Shelbyville, KY 40065
LINDA S. WHITTON, Valparaiso University School of Law, Wesemann Hall, 656 S. Greenwich, Valparaiso, IN 46383, Reporter
EX OFFICIO
FRED H. MILLER, University of Oklahoma, College of Law, 300 Timberdell Rd., Room 3056, Norman, OK 73019, President
MARTHA T. STARKEY, Suite 850, 30 S. Meridian St., Indianapolis, IN 46204, Division Chair
AMERICAN BAR ASSOCIATION ADVISORS
WILLIAM P. LAPIANA, New York Law School, 57 Worth St., New York, NY 10013, Advisor
ABIGAIL G. KAMPMANN, 153 Treeline, Suite 320, San Antonio, TX 78209-1880, Real Property, Probate and Trust Law Section Advisor
CHARLES P. SABATINO, ABA Commission on Law and Aging, 740 15th St., Washington, DC 20005, ABA Commission on Law and Aging Advisor
EXECUTIVE DIRECTOR
WILLIAM H. HENNING, University of Alabama School of Law, Box 870382, Tuscaloosa, AL 35487-0382, Executive Director
Copies of this Act may be obtained from:
NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS
211 E. Ontario Street, Suite 1300
Chicago, Illinois 60611
312/915-0195
www.nccusl.org
UNIFORM POWER OF ATTORNEY ACT
TABLE OF CONTENTS
[ARTICLE] 1
GENERAL PROVISIONS AND DEFINITIONS
SECTION 104. KNOWLEDGE; NOTICE
SECTION 105. POWER OF ATTORNEY NOT AFFECTED BY INCAPACITY OR LAPSE OF TIME
SECTION 108. AUTHORITY OF AGENT
SECTION 109. NOMINATION OF GUARDIAN; RELATION OF AGENT TO COURT-APPOINTED FIDUCIARY
SECTION 112. CO-AGENTS AND SUCCESSOR AGENTS
SECTION 113. COMPENSATION AND REIMBURSEMENT OF AGENT
SECTION 117. AGENT’S LIABILITY
SECTION 118. AGENT’S RESIGNATION; NOTICE
SECTION 119. PROTECTION OF PERSONS DEALING WITH AN AGENT
SECTION 120. LIABILITY FOR REFUSAL TO ACCEPT AGENT’S AUTHORITY
SECTION 121. PRINCIPLES OF LAW AND EQUITY
SECTION 201. INCORPORATION OF POWERS.
SECTION 202. CONSTRUCTION OF POWERS GENERALLY
SECTION 204. TANGIBLE PERSONAL PROPERTY
SECTION 206. COMMODITIES AND OPTIONS
SECTION 207. BANKS AND OTHER FINANCIAL INSTITUTIONS
SECTION 208. OPERATION OF BUSINESS
SECTION 209. INSURANCE AND ANNUITIES
SECTION 210. ESTATES, TRUSTS, AND OTHER BENEFICIARY RELATIONSHIPS
SECTION 211. CLAIMS AND LITIGATION
SECTION 212. PERSONAL AND FAMILY MAINTENANCE
SECTION 213. BENEFITS FROM GOVERNMENTAL PROGRAMS OR CIVIL OR MILITARY SERVICE
SECTION 217. DELEGATION OF AGENCY AUTHORITY
[ARTICLE] 3
STATUTORY FORM POWER OF ATTORNEY
SECTION 302. AGENT CERTIFICATION
[ARTICLE] 4
MISCELLANEOUS PROVISIONS
SECTION 401. UNIFORMITY OF APPLICATION AND CONSTRUCTION
SECTION 402. ELECTRONIC SIGNATURES
SECTION 404. EFFECT ON EXISTING POWERS OF ATTORNEY
UNIFORM POWER OF ATTORNEY ACT
The catalyst for the new Uniform Power of Attorney Act (“the Act”) was a national study in 2002 which revealed growing divergence in state power of attorney legislation. The original Uniform Durable Power of Attorney Act (“Original Act”), last amended in 1987, was at one time followed by all but a few jurisdictions. Despite initial uniformity, the study found that a majority of states had enacted non-uniform provisions to deal with specific matters upon which the Original Act is silent. The topics about which there was increasing divergence included: 1) the authority of multiple agents; 2) the authority of a later-appointed fiduciary or guardian; 3) the impact of dissolution or annulment of the principal’s marriage to the agent; 4) activation of contingent powers; 5) the authority to make gifts; and 6) standards for agent conduct and liability. Other topics about which states had legislated, although not necessarily in a divergent manner, included: successor agents, execution requirements, portability, sanctions for dishonor of a power of attorney, and restrictions on powers that have the potential to dissipate a principal’s property or alter a principal’s estate plan.
To ascertain whether there was actual divergence of opinion about default rules for powers of attorney or only the lack of a detailed uniform model, the Conference conducted a national survey. The survey was distributed to probate and elder law sections of all state bar associations, to the fellows of the American College of Trust and Estate Counsel, the leadership of the ABA Section of Real Property, Probate and Trust Law and the National Academy of Elder Law Attorneys, as well as to special interest listserves of the ABA Commission on Law and Aging. Forty-four jurisdictions were represented in the 371 surveys returned.
The survey responses demonstrated a consensus of opinion in excess of seventy percent that a power of attorney statute should:
(1) provide for a confirming affidavit to activate contingent powers;
(2) revoke a spouse-agent’s authority upon the dissolution or annulment of the marriage
to the principal;
(3) include a portability provision;
(4) require gift making authority to be expressly stated in the grant of authority;
(5) provide a default standard for fiduciary duties;
(6) permit the principal to alter the default fiduciary standard;
(7) require notice by an agent when the agent is no longer willing or able to act;
(8) include safeguards against abuse by the agent;
(9) include remedies and sanctions for abuse by the agent;
(10) protect the reliance of other persons on a power of attorney; and
(11) include remedies and sanctions for refusal of other persons to honor power of
attorney.
Informed by the study and survey results, the Conference drafted the Act to reflect both state legislative trends and collective best practices. While the Act is primarily a set of default rules that can be altered by specific provisions within a power of attorney, the Act also contains certain safeguards for the protection of an incapacitated principal. The Act was drafted to strike a balance between the need for flexibility and acceptance of an agent’s authority and the need to prevent and redress abuse.
Among the provisions that enhance flexibility are the statutory definitions of powers in Article 2 which can be incorporated by reference in an individually drafted power of attorney or selected for inclusion on the optional statutory form provided in Article 3. The statutory definitions of enumerated powers are an updated version of those in the Uniform Statutory Form Power of Attorney Act (1988), which the Act repeals. The Conference study found that seventeen jurisdictions had adopted some type of statutory form power of attorney. The decision to include a statutory form power of attorney in the Act was based on this trend and the proliferation of power of attorney forms currently available to the public.
Sections 119 and 120 of the Act address the problem of persons refusing to honor an agent’s authority. Section 119 provides protection from liability for persons who in good faith accept the agent’s authority. This section also prohibits such persons from requiring a different form of power of attorney. Section 120 sanctions refusal to accept an agent’s authority unless the refusal meets limited statutory exceptions.
In exchange for mandated acceptance of an agent’s authority, the Act does not place upon persons who deal with an agent the duty to investigate the agent or the agent’s actions. Safeguards against abuse are provided, instead, through heightened requirements for delegating authority that could dissipate the principal’s property or alter the principal’s estate plan (Section 108), provisions that set out the agent’s duties and liabilities (Sections 114 and 117) and by specification of comprehensive categories of persons who have standing to request judicial review of the agent’s conduct (Section 116). A provision that gives the reviewing court discretion to award attorney fees to the prevailing party (Section 116(b)) serves to both deter frivolous actions and facilitate redress where warranted.
Overview of the Uniform Power of Attorney Act
The Act consists of 4 articles. The basic substance of the Act is located in Articles 1 and 2. Article 3 contains the optional statutory form and Article 4 consists of miscellaneous provisions dealing with general application of the Act and repeal of certain prior acts. The following is a brief overview.
Article 1 – General Provisions and Definitions – Section 102 provides that the Act is to apply broadly to all powers of attorney, but excepts from the Act powers of attorney for health care and certain specialized powers such as those coupled with an interest or dealing with proxy voting. Section 103 lists definitions which are useful in interpretation of the Act. Of particular note is the definition of “incapacity” which replaces the term “disability” used in the Original Act. The definition of “incapacity” is taken from the Uniform Guardianship and Protective Proceedings Act as amended in 1997. Another significant change in terminology from the Original Act is the use of “agent” in place of the term “attorney in fact”. The term “agent” was also used in the Uniform Statutory Form Power of Attorney Act and is intended to clarify confusion in the lay public about the meaning of “attorney in fact.”
Another innovation is the presumption of durability contained in Section 105. This change reflects the view that most principals prefer their powers of attorney to be durable rather than non-durable. No longer must a durable power of attorney include language indicating that the authority conferred is exercisable notwithstanding the principal’s subsequent disability or incapacity. A power of attorney executed under the Act is durable unless it contains express language indicating otherwise. While the Original Act was silent on execution requirements for a power of attorney, Section 106 requires the principal’s signature and provides that an acknowledged signature is presumed genuine. Section 107 enumerates those powers executed in another state or country or under pre-existing law that will be considered valid under the Act.
Article 1 also addresses concerns about powers that have the potential of dissipating the principal’s property or altering the principal’s estate plan. Section 108(b) lists the powers that cannot be implied from a general grant of authority, but which must instead be delegated through express inclusion in the power of attorney. Of particular note is Section 108(b)(6) which requires an express grant of authority to empower the agent to create with the principal’s property a gift, survivorship right, or beneficiary designation in the agent or in a person customarily supported by the agent.
Section 109 provides guidance on the relationship of the agent to a later court-appointed fiduciary. The Original Act conferred upon a later-appointed fiduciary the same power to revoke or amend the power of attorney as the principal would have had prior to incapacity. In contrast, the Act reserves this power to the court and states that the agent’s authority continues until limited, suspended, or terminated by the court. This approach reflects greater deference for the previously expressed preferences of the principal and is consistent with the Uniform Guardianship and Protective Proceedings Act.
The default rule for when a power of attorney becomes effective is stated in Section 110. Unless the principal specifies that it is to become effective upon a future date, event, or contingency, a power of attorney becomes effective when executed. The principal is permitted under this section to designate who may determine when contingent powers are triggered. The determination of a person designated by the principal may be considered conclusive by those relying on the power of attorney. If the trigger for contingent powers is the principal’s incapacity, Section 110 provides that the person designated to make that determination has the authority to act as the principal’s personal representative under the Health Insurance Portability and Accountability Act for purposes of accessing the principal’s health care information and communicating with the principal’s health care provider. This provision does not, however, confer upon an agent the authority to make health care decisions for the principal. If the trigger for contingent powers is incapacity but the principal has not designated anyone to make the determination, the statute provides for determination by a physician or licensed psychologist as a default position.
The bases for termination of a power of attorney are covered in Section 111. In response to concerns expressed in the Conference survey, the Act provides as the default rule that authority granted to a principal’s spouse is revoked upon the commencement of proceedings for legal separation, marital dissolution or annulment.
Sections 112 through 118 deal with matters related to the agent, including default rules for compensation, reimbursement, agent duties and liability. Section 115 provides that a principal may lower the standard of liability for agent conduct subject to a minimum level of accountability for actions taken in bad faith or with reckless indifference to the purposes of the power of attorney. Section 116 sets out a comprehensive list of persons who may petition the court to review the agent’s conduct. An agent may resign by following the notice procedures described in Section 118.
Sections 119 and 120 are included in the Act to address the frequently reported problem of persons who refuse to accept an agent’s authority. Section 119 protects persons who accept an agent’s authority without knowledge that a power of attorney is revoked, terminated, or invalid or that the agent is exceeding or improperly exercising the agent’s powers. A person who accepts an agent’s authority in good faith is not required to make inquiry into the extent of the agent’s powers or the propriety of their exercise, and may rely on an agent’s certification as to any matter concerning the power of attorney or the principal. In exchange for this protection, Section 120(a) imposes liability for refusal to accept an agent’s authority subject to limited exceptions in Section 120(b).
Section 121 clarifies that the Act is supplemented by existing bodies of law, including the common law and equity. While the principles of common law and equity may supplement the provisions of the Act, the Uniform Power of Attorney Act preempts principles of common law and equity that are inconsistent with either its provisions or its purposes and policies.
Article 2 – Powers – The Act offers the drafting attorney enhanced flexibility whether drafting an individually tailored power of attorney or using the statutory form. Like the Uniform Statutory Form Power of Attorney Act, Article 2 of the Act sets forth detailed descriptions of powers that can be conveyed to an agent. Section 201 provides that these powers can be incorporated by reference using the short descriptive captions or section numbers in Article 2. These definitions also provide the meaning for the powers enumerated on the optional statutory form in Article 3. Section 201 further states that these powers may be modified in the power of attorney.
Article 3 – Statutory Form Power of Attorney – The optional form in Article 3 is designed for use by lawyers as well as lay persons. It contains, in plain language, instructions to the principal and agent. Step-by-step prompts are given for designation of the agent, successor agent(s), and the grant of powers. In the grant of powers section, the principal must decide to cross out any of the general powers listed on the form that the principal does not wish to delegate to the agent. There is a separate list of the Section 108(b) powers for which the statute requires an express grant of authority. If the principal wishes to grant any of the Section 108(b) powers, the principal must initial each power to be granted.
Article 4 – Miscellaneous Provisions – The miscellaneous provisions in Article 4 clarify that the Act is intended to have the widest possible effect within constitutional limitations. The Act repeals the Uniform Durable Power of Attorney Act, The Uniform Statutory Form Power of Attorney Act, and Article 5, Part 5 of the Uniform Probate Code.
UNIFORM POWER OF ATTORNEY ACT
GENERAL PROVISIONS AND DEFINITIONS
SECTION 101. SHORT TITLE. This [act] may be cited as the Uniform Power of Attorney Act.
SECTION 102. SCOPE. This [act] applies to all powers of attorney except:
(1) a power given to another person to make health care decisions;
(2) a power of attorney to the extent that it is coupled with an interest in the subject of the power;
(3) a proxy given to another person to exercise voting rights;
(4) a power given to or for the benefit of a creditor in connection with a credit transaction;
(5) a power contained in the governing document of a corporation, partnership, limited liability company, association or other legal entity by which a director, partner or member authorizes others to act on behalf of the entity; and.
(6) a power of attorney created on a form prescribed by a government or governmental subdivision, agency or other instrumentality for a governmental purpose.
SECTION 103. DEFINITIONS. In this [act]:
(1) “Agent” means the person granted authority to act as an attorney in fact for the principal under a power of attorney and includes the original agent and any co-agent or successor agent.
(2) “Court” means the [ ] court.
(3) “ Incapacity” means inability of an individual to manage property or business affairs because of an impairment in the ability to receive and evaluate information or make or communicate decisions even with the use of technological assistance, or because the individual is missing, detained, or unable to return to the United States. “Incapacitated” has a corresponding meaning.
(4) “Person” means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, public corporation, government, governmental subdivision, agency or instrumentality, or any other legal or commercial entity.
(5) “Power of attorney” means an instrument in which a principal grants authority to an agent.
(6) “Principal” means an individual who grants authority to an agent in a power of attorney.
(7) “Property” means anything that may be the subject of ownership, whether real or personal, legal or equitable, or any interest therein.
(8) “Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
(9) “Sign” means with present intent to authenticate or adopt a record:
(i) to execute or adopt a tangible symbol; or
(ii) to attach to or logically associate with the record an electronic sound, symbol, or process.
(10) “State” means a state of the United States, the District of Columbia, Puerto Rico, United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States. The term includes a Native American nation, tribe, pueblo or band recognized by federal law or formally acknowledged by a State.
SECTION 104. KNOWLEDGE; NOTICE.
(a) Subject to subsection (b), a person has knowledge of a fact involving a power of attorney if the person:
(1) has actual knowledge of it;
(2) has received a notice or notification of it; or
(3) from all the facts and circumstances known to the person at the time in question, has reason to know it.
(b) An organization has notice or knowledge of a fact involving a power of attorney from the time it is brought to the attention of the individual conducting a transaction involving the power of attorney and, in any event, from the time it would have been brought to the individual’s attention if the organization had exercised reasonable diligence. An organization exercises reasonable diligence if it maintains reasonable routines for communicating significant information to the individual conducting the transaction and the organization reasonably complies with the routines. Reasonable diligence does not require an individual acting for the organization to communicate information unless the communication is part of the individual’s duties or the individual has reason to know of the transaction and that the transaction would be materially affected by the information. If an organization conducts activities through branch or multiple offices, notice to a branch or office other than the office where the power of attorney is presented is attributable to the individual conducting the transaction not later than three business days from the date of notice to the branch or other office.
SECTION 105. POWER OF ATTORNEY NOT AFFECTED BY INCAPACITY OR LAPSE OF TIME.
(a) A power of attorney is durable unless the power of attorney expressly provides that it is terminated by the incapacity of the principal. Durable, with reference to a power of attorney, means that the agent’s authority survives the principal’s incapacity or takes effect upon the principal’s incapacity.
(b) All acts performed by an agent pursuant to a power of attorney have the same effect and inure to the benefit of and bind the principal and the principal’s successors in interest as if the principal had performed the acts. Unless the power of attorney provides a time of termination, the authority of an agent is exercisable notwithstanding a lapse of time since the execution of the power of attorney.
SECTION 106. CREATION. The principal must sign a power of attorney or direct another individual to sign on behalf of the principal in the principal’s presence. If the principal acknowledges the signature before a notary public or another person authorized to take acknowledgments, the signature is presumed genuine.
SECTION 107. POWER OF ATTORNEY EXECUTED IN ANOTHER STATE OR COUNTRY; PRE-EXISTING POWERS OF ATTORNEY; INTERPRETATION.
(a) A power of attorney executed in another state or country is valid and enforceable in this state if its creation complies with:
(1) the law of the state or country in which the power of attorney was executed;
(2) the law of this state;
(3) the law of the state or country where the principal is domiciled, has a place of abode or business, or is a national; or
(4) the law of the state or country where the agent is domiciled or has a place of business.
(b) A power of attorney executed in this state before [the effective date of this act] is valid and enforceable in this state if its creation complies with the law of this state as it existed at the time of execution.
(c) This [act] may not be applied to enlarge the scope of authority granted to an agent in a power of attorney executed in another state or country or under pre-existing law.
SECTION 108. AUTHORITY OF AGENT.
(a) Subject to subsection (b), if a principal grants to an agent general authority that is not limited to one or more express acts, subjects, or purposes for which general authority is granted, the agent has all the authority to act that the principal would have if the principal had capacity to contract, other than an act for which the personal action of the principal is required. Examples of acts for which the personal action of the principal is required include entering into marriage, exercising governmental voting privileges, and making a last will and testament.
(b) An agent has authority under a power of attorney to do the following on behalf of the principal or with the principal’s property only if the power of attorney expressly grants the authority to:
(1) create, modify, or revoke a trust;
(2) fund a trust not created by the principal;
(3) make a gift;
(4) create or change rights of survivorship;
(5) designate or change the designation of a beneficiary;
(6) create in the agent or a person customarily supported by the agent an interest in the principal’s property through gift, survivorship right or beneficiary designation; [or]
(7) delegate to another person the agency authority granted under the power of attorney[.] [; or
(8) disclaim property, including a power of appointment.]
[Authority to make a gift is further subject to Section 216 unless otherwise modified by the terms of the power of attorney.]
(c) With the exception of powers granted pursuant to subsection (b), if powers granted in a power of attorney are similar or overlap, the broadest power controls.
(d) If a principal grants inconsistent authority to one or more agents in two or more powers of attorney, the authority granted last controls to the extent of the inconsistency.
(e) Powers granted in a power of attorney are exercisable with respect to property the principal has when the power of attorney is executed or an interest acquired after execution, whether or not the property is located in this State, and whether or not the powers are exercised or the power of attorney is executed in this State.
SECTION 109. NOMINATION OF GUARDIAN; RELATION OF AGENT TO COURT-APPOINTED FIDUCIARY.
(a) In a power of attorney, a principal may nominate a conservator, guardian of the principal’s estate, or guardian of the principal’s person for consideration by the court if protective proceedings for the principal’s estate or person are thereafter commenced. [The court shall make its appointment in accordance with the principal's most recent nomination in a power of attorney except for good cause or disqualification.]
(b) If, after the execution of a power of attorney, a court appoints a conservator or guardian of the principal’s estate, or other fiduciary charged with the management of all of the principal's property or all of the property except specified exclusions, the agent is accountable to the fiduciary as well as to the principal. [The agent’s authority continues until limited, suspended, or terminated by the court.]
(a) An agent’s authority under a power of attorney becomes effective when executed unless the principal specifies that it is to become effective at a future date, or upon the occurrence of a future event or contingency.
(b) If a power of attorney becomes effective upon the occurrence of a future event or contingency, the principal may designate one or more persons who have authority to determine conclusively in a writing or other record that the event or contingency has occurred. Other persons may rely on the determination of a person so designated by the principal without liability to the principal or to any other person, whether or not the event or contingency has actually occurred.
(c) If a power of attorney becomes effective upon the principal’s incapacity and the principal has not designated a person to have authority to determine that the principal is incapacitated, the power of attorney becomes effective upon a determination in a writing or other record by a physician [or licensed psychologist] that the principal is incapacitated. Other persons may rely on the determination of the physician [or licensed psychologist] without liability to the principal or to any other person.
(d) A person designated by the principal to make a determination of the principal’s incapacity may act as the principal’s personal representative pursuant to sections 1171 through 1179 of the Social Security Act, 42 U.S.C. Section 1320d (sections 262 and 264 of Public Law 104-191) [or successor provisions] and applicable regulations, to access the principal’s health care information and communicate with the principal’s health care provider or physician.
(a) Subject to subsections (b), (c) and (d), a power of attorney is terminated when:
(1) the principal dies;
(2) the principal becomes incapacitated, if the power of attorney is not durable;
(3) the principal revokes the power of attorney or terminates the agent’s authority;
(4) the agent dies or is adjudged incapacitated;
(5) the agent resigns pursuant to the provisions of Section 118;
(6) proceedings are commenced for the [legal separation or divorce of the principal and agent] [dissolution or annulment of the agent’s marriage to the principal];
(7) the power of attorney states that it is terminated; or
(8) the purpose of the power of attorney is accomplished.
(b) A power of attorney is not terminated by the termination of an agent’s authority or the agent’s death or resignation if the power of attorney provides for a co-agent or successor agent.
(c) Termination of the agent’s authority, revocation of the power of attorney by the principal or the death of the principal does not terminate the agency as to the agent or other person that, without knowledge of the termination of the agent’s authority, revocation of the power of attorney or the death of the principal, acts in good faith under the power. An act so performed, unless otherwise invalid or unenforceable, binds the principal and the successors in interest of the principal.
(d) The incapacity of a principal who has previously executed a power of attorney that is not a durable power does not revoke or terminate the agency as to the agent or other person that, without knowledge of the incapacity, acts in good faith under the power. An act so performed, unless otherwise invalid or unenforceable, binds the principal and the successors in interest of the principal.
SECTION 112. CO-AGENTS AND SUCCESSOR AGENTS.
(a) Unless the power of attorney or this section otherwise provides, authority granted to two or more co-agents is exercisable only by their majority consent. However, if prompt action is required to accomplish the purposes of the power of attorney or to avoid irreparable injury to the principal’s interests and an agent is unavailable because of absence, illness, or other temporary incapacity, the other agents may act for the principal. If a vacancy occurs in one or more of the designations of agent under a power of attorney, the remaining agents may act for the principal.
(b) A principal may designate one or more successor agents to act if an initial or predecessor agent resigns, dies, becomes incapacitated, is not qualified to serve, or declines to serve. A principal may grant authority to another person, designated by name, by office, or by function, including an initial or successor agent, to designate one or more successor agents. Unless a power of attorney otherwise provides, a successor agent has the same authority as that granted to an initial agent.
(c) An agent is not liable for the actions of another agent, including a predecessor agent, unless the agent participates in or conceals a breach of fiduciary duty committed by the other agent. An agent who has knowledge of a breach or imminent breach of fiduciary duty by another agent must notify the principal, and, if the principal is incapacitated, take whatever actions may be reasonably appropriate in the circumstances to safeguard the principal’s best interests.
SECTION 113. COMPENSATION AND REIMBURSEMENT OF AGENT. If a power of attorney does not specify an agent’s compensation, the agent is entitled to compensation that is reasonable under the circumstances. Except as otherwise provided in a power of attorney, an agent is entitled to reimbursement of reasonable expenses advanced by the agent on behalf of the principal.
(a) An agent’s acceptance of authority under a power of attorney creates an agency relationship. An agent accepts authority under a power of attorney by exercising powers or performing duties as an agent or by any other assertion or conduct indicating acceptance.
(b) Except as otherwise provided in the power of attorney, an agent must:
(1) act loyally for the principal’s benefit in accordance with the reasonable expectations of the principal known to the agent, and, otherwise, with the care, competence and diligence normally exercised by agents in similar circumstances for the best interest of a principal;
(2) avoid creating a conflict of interest that would impair the agent’s ability to act impartially in the best interest of the principal;
(3) keep a complete record of all receipts, disbursements, and transactions conducted on behalf of the principal;
(4) perform no act beyond the authority granted by the principal;
(5) cooperate with a person that has authority to make health care decisions for the principal in accordance with the principal’s expectations, if known to the agent, and, otherwise, in accordance with what is reasonably believed by the agent to be in the best interest of the principal; and
(6) take the principal’s estate plan into account to the extent known to the agent and attempt to preserve the plan if consistent with the principal’s best interest based on all relevant factors, including the principal’s foreseeable obligations and need for maintenance;
minimization of income, estate, inheritance, generation-skipping transfer or gift taxes; and
eligibility for public benefits or assistance under a statute or governmental regulation. An agent is not liable to any beneficiary of the plan for failure to preserve the principal’s estate plan unless the agent acts in bad faith.
(c) An agent who acts in good faith, with care, competence, and diligence for the best interest of the principal is not liable solely because the agent also benefits from the act or has an individual or conflicting interest in relation to the property or affairs of the principal.
(d) When an agent has skills or knowledge that exceed those possessed by most others, the agent’s skills or knowledge are circumstances to be considered in determining whether the agent has acted with due care, competence and diligence.
(e) Absent a breach of duty to the principal, an agent is not liable if the value of the principal’s property declines.
(f) An agent that employs another person on behalf of the principal is not liable for an error of judgment, act or default of that person provided the agent exercises due care, competence, and diligence in selecting and monitoring the person.
(g) If an agent is granted delegating authority under Section 108 (7) to delegate to another person the agency authority granted by the principal, the agent remains responsible to the principal for the exercise or nonexercise of the delegated authority.
(h) Except as otherwise provided in the power of attorney, an agent is not required to disclose receipts, disbursements, or transactions conducted on behalf of the principal unless requested by the principal, a guardian, conservator, or other fiduciary appointed for the principal, any governmental agency having authority to protect the welfare of the principal, or, upon the death of the principal, by the personal representative or successor in interest of the principal’s estate, or ordered by a court. If so requested, the agent shall comply within 30 days or provide a writing or other record substantiating why additional time is needed, and in such event, shall comply within an additional 30 days.
SECTION 115. EXONERATION. A provision in a power of attorney relieving the agent of liability for breach of duty is binding on the principal and the principal’s successors in interest except to the extent that the provision:
(1) relieves the agent of liability for breach of duty committed in bad faith or with reckless indifference to the purposes of the power of attorney or the interests of the principal; or
(2) was inserted as a result of an abuse by the agent of a confidential or fiduciary relationship with the principal.
(a) The court may construe a power of attorney, review the agent’s conduct, and grant appropriate relief. Persons who may petition the court include:
(1) the principal or the agent;
(2) a conservator, guardian of the estate, or other fiduciary charged with management of the principal’s property;
(3) the principal’s spouse, parent, or descendant;
(4) a person who would qualify as an intestate successor of the principal; (5) a person named as a beneficiary to receive any property, benefit, or contractual right on the principal’s death, or as a beneficiary of a trust created by or for the principal;
(6) a governmental agency having regulatory authority to protect the welfare of the principal; and
(7) the principal’s caregiver or any other person who demonstrates sufficient interest in the principal’s welfare.
(b) The court may award reasonable attorneys’ fees and expenses to the prevailing party.
SECTION 117. AGENT’S LIABILITY. An agent that violates this [act] is liable to the principal or the principal’s successors in interest for (i) the damages and (ii) attorneys’ fees and expenses paid from the principal’s estate, resulting from the violation and for any amounts awarded under Section 116(b).
SECTION 118. AGENT’S RESIGNATION; NOTICE. An agent may resign by giving notice to the principal and, if the principal is incapacitated, to:
(1) the conservator or guardian, if one has been appointed for the principal, and a co-agent or successor agent, if any; or
(2) the principal’s caregiver or other person reasonably believed by the agent to have sufficient interest in the principal’s welfare, if the principal has neither a conservator nor a guardian, and has not named a co-agent or successor agent; or
(3) a governmental agency having authority to protect the welfare of the principal, if the principal has neither a conservator nor a guardian, has not named a co-agent or successor agent, and has no caregiver or other person with sufficient interest in the principal’s welfare..
SECTION 119. PROTECTION OF PERSONS DEALING WITH AN AGENT.
(a) A person that in good faith accepts an agent’s authority, without knowledge that an agent’s authority has been terminated, that a power of attorney has been terminated or is invalid or that the agent is exceeding or improperly exercising the agent’s powers, is protected from liability as if the power of attorney were still in effect and valid and the agent had properly exercised the power.
(b) A person that in good faith accepts an agent’s authority is not required to inquire into the extent of the agent’s powers or the propriety of their exercise, but may require and rely upon, without further investigation, an agent’s certification as to any matters concerning the power of attorney or the principal.
(c) A person with which an agent seeks to act may not require an additional or different form of power of attorney for authority granted in the power of attorney presented.
(d) A photocopy or electronically transmitted copy of an original power of attorney is as valid as the original.
SECTION 120. LIABILITY FOR REFUSAL TO ACCEPT AGENT’S AUTHORITY.
(a) Except as otherwise provided in subsection (b), a person that refuses to accept the authority of an agent within 5 business days of presentment of a power of attorney is liable to the principal or the principal’s successors in interest to the same extent as the person would be liable had the person refused to accept the authority of a principal who has capacity to act on the principal’s own behalf. The amount recoverable for refusal to accept an agent’s authority is the total of the damages from the refusal or $1000, whichever is greater, plus costs and reasonable attorneys’ fees.
(b) A person that refuses to accept the authority of an agent to exercise a power granted under a power of attorney is not liable under subsection (a) if:
(1) the person has knowledge of the termination of the agent’s authority or termination of the power of attorney before the exercise of the power;
(2) the person reasonably believes that the power of attorney is not valid under the law of this state or that the agent does not have authority to perform the act requested and provides the agent with a writing or other record not more than 5 business days after the refusal which describes the reason that the power of attorney is not valid or that the agent lacks authority; or
(3) the person has made a good faith report to the [local adult protective services unit] alleging physical or financial abuse, neglect, exploitation or abandonment of the principal by the agent or has knowledge that such a report was made by another person.
(c) This section does not abrogate any other cause of action or remedy to which the principal or agent is entitled under another statute, common law, or in equity.
SECTION 121. PRINCIPLES OF LAW AND EQUITY. Unless displaced by the particular provisions of this [act], the principles of law and equity, including the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, ratification, bankruptcy and other validating or invalidating cause, supplement its provisions.
POWERS
SECTION 201. INCORPORATION OF POWERS.
(a) An agent has a power described in this [Article] if the power of attorney incorporates the power by:
(1) referring to a descriptive caption in Sections 203 through 217; or
(2) citing to a specific section of Sections 203 through 217.
(b) A reference in a power of attorney to a descriptive caption in Sections 203 through 217 or a citation to a specific section of Sections 203 through 217 incorporates the entire section as if it were set out in full in the power of attorney.
(c) The principal may modify a power incorporated by reference.
(d) All powers in this [Article] are subject to the provisions of Section 108.
SECTION 202. CONSTRUCTION OF POWERS GENERALLY. By executing a power of attorney that incorporates by reference a power described in Sections 203 through 217, except as provided in Section 108 or modified in the power of attorney, the principal authorizes the agent with respect to that subject to:
(1) demand, receive, and obtain by litigation or otherwise, money or other thing of value to which the principal is, may become, or claims to be entitled, and conserve, invest, disburse, or use anything so received for the purposes intended;
(2) contract in any manner with any person, on terms agreeable to the agent, to accomplish a purpose of a transaction, and perform, rescind, reform, release, or modify the contract or another contract made by or on behalf of the principal;
(3) execute, acknowledge, seal, and deliver a deed, revocation, mortgage, security agreement, lease, notice, check, promissory note, electronic funds transfer, release, or other instrument or communication the agent considers desirable to accomplish a purpose of a transaction, including creating a schedule of the principal’s property and attaching it to the power of attorney;
(4) prosecute, defend, submit to arbitration or mediation, settle, and propose or accept a compromise with respect to, a claim existing in favor of or against the principal or intervene in litigation relating to the claim;
(5) seek on the principal’s behalf the assistance of a court to carry out an act authorized by the principal in the power of attorney;
(6) engage, compensate, and discharge an attorney, accountant, expert witness, or other assistant;
(7) keep appropriate records of each transaction, including an accounting of receipts and disbursements;
(8) prepare, execute, and file a record, report, or other document the agent considers desirable to safeguard or promote the principal’s interest under a statute or governmental regulation;
(9) reimburse the agent for expenditures properly made by the agent in exercising the powers granted by the power of attorney; and
(10) in general, do any other lawful act with respect to the power and all property related to the power.
SECTION 203. REAL PROPERTY. Language granting power with respect to real property authorizes the agent to:
(1) accept as a gift or as security for an extension of credit, reject, demand, buy, lease, receive, or otherwise acquire, an interest in real property or a right incident to real property;
(2) sell, exchange, convey with or without covenants, quitclaim, release, surrender, mortgage, retain title for security, encumber, partition, consent to partitioning, subdivide, apply for zoning, rezoning, or other governmental permits, plat or consent to platting, develop, grant options concerning, lease, sublease, or otherwise dispose of, an interest in real property or a right incident to real property;
(3) release, assign, satisfy, or enforce by litigation or otherwise, a mortgage, deed of trust, conditional sale contract, encumbrance, lien, or other claim to real property which exists or is asserted;
(4) manage or conserve an interest in real property or a right incident to real property, owned or claimed to be owned by the principal, including:
(A) insuring against a casualty, liability, or loss;
(B) obtaining or regaining possession, or protecting the interest or right, by litigation or otherwise;
(C) paying, compromising, or contesting taxes or assessments, or applying for and receiving refunds in connection with them; and
(D) purchasing supplies, hiring assistance or labor, and making repairs or alterations to the real property;
(5) use, develop, alter, replace, remove, erect, or install structures or other improvements upon real property in or incident to which the principal has, or claims to have, an interest or right;
(6) participate in a reorganization with respect to real property or a legal entity that owns an interest in or right incident to real property and receive and hold, directly or indirectly, shares of stock or obligations, or other evidences of ownership or debt, received in a plan of reorganization, and act with respect to them, including:
(A) selling or otherwise disposing of them;
(B) exercising or selling an option, conversion, or similar right with respect to them; and
(C) voting them in person or by proxy;
(7) change the form of title of an interest in or right incident to real property, except as otherwise provided in Section 108(b); and
(8) dedicate to public use, with or without consideration, easements or other real property in which the principal has, or claims to have, an interest.
SECTION 204. TANGIBLE PERSONAL PROPERTY. Language granting power with respect to tangible personal property authorizes the agent to:
(1) accept as a gift or as security for an extension of credit, reject, demand, buy, receive, or otherwise acquire ownership or possession of tangible personal property or an interest in tangible personal property;
(2) sell, exchange, convey with or without covenants, release, surrender, create a security interest in, grant options concerning, lease, sublease to others, or otherwise dispose of tangible personal property or an interest in tangible personal property;
(3) release, assign, satisfy, or enforce by litigation or otherwise, a security interest, lien, or other claim on behalf of the principal, with respect to tangible personal property or an interest in tangible personal property;
(4) manage or conserve tangible personal property or an interest in tangible personal property on behalf of the principal, including:
(A) insuring against casualty, liability, or loss;
(B) obtaining or regaining possession, or protecting the property or interest, by litigation or otherwise;
(C) paying, compromising, or contesting taxes or assessments or applying for and receiving refunds in connection with taxes or assessments;
(D) moving from place to place;
(E) storing for hire or on a gratuitous bailment; and
(F) using, altering, and making repairs or alterations; and
(5) change the form of title of an interest in tangible personal property, except as otherwise provided in Section 108(b).
SECTION 205. STOCKS AND BONDS. Language granting power with respect to transactions concerning stocks and bonds authorizes the agent to buy, sell, and exchange stocks, bonds, mutual funds, and all other types of securities and financial instruments, whether held directly or indirectly, except commodity futures contracts and call and put options on stocks and stock indexes, receive certificates and other evidences of ownership with respect to securities, exercise voting rights with respect to securities in person or by proxy, enter into voting trusts, and consent to limitations on the right to vote.
SECTION 206. COMMODITIES AND OPTIONS. Language granting power with respect to transactions concerning commodities and options authorizes the agent to buy, sell, exchange, assign, settle, and exercise commodity futures contracts and call and put options on stocks and stock indexes traded on a regulated option exchange, and establish, continue, modify, and terminate option accounts with a broker.
SECTION 207. BANKS AND OTHER FINANCIAL INSTITUTIONS. Except as otherwise provided in Section 108(b), language granting power with respect to transactions concerning banks and other financial institutions authorizes the agent to:
(1) continue, modify, and terminate an account or other banking arrangement made by or on behalf of the principal;
(2) establish, modify, and terminate an account or other banking arrangement with a bank, trust company, savings and loan association, credit union, thrift company, brokerage firm, or other financial institution selected by the agent;
(3) rent a safe deposit box or space in a vault;
(4) contract for other services available from a financial institution as the agent considers desirable;
(5) withdraw by check, order, or otherwise money or property of the principal deposited with or left in the custody of a financial institution;
(6) receive bank statements, vouchers, notices, and similar documents from a financial institution and act with respect to them;
(7) enter a safe deposit box or vault and withdraw or add to the contents;
(8) borrow money at an interest rate agreeable to the agent and pledge as security personal property of the principal necessary in order to borrow, pay, renew, or extend the time of payment of a debt of the principal;
(9) make, assign, draw, endorse, discount, guarantee, and negotiate promissory notes, checks, drafts, and other negotiable or nonnegotiable paper of the principal, or payable to the principal or the principal’s order, transfer money, receive the cash or other proceeds of those transactions, accept a draft drawn by a person upon the principal, and pay it when due;
(10) receive for the principal and act upon a sight draft, warehouse receipt, or other negotiable or nonnegotiable instrument;
(11) apply for, receive, and use letters of credit, credit and debit cards, and traveler’s checks from a financial institution and give an indemnity or other agreement in connection with letters of credit; and
(12) consent to an extension of the time of payment with respect to commercial paper or a financial transaction with a financial institution.
SECTION 208. OPERATION OF BUSINESS. Language granting power with respect to operating a business authorizes the agent to:
(1) operate, buy, sell, enlarge, reduce, and terminate a business interest;
(2) act for a principal, subject to the terms of a partnership agreement or operating agreement, to:
(A) perform a duty or discharge a liability and exercise a right, power, privilege, or option that the principal has, may have, or claims to have, under the partnership agreement or operating agreement, whether or not the principal is a partner in a partnership or member of a limited liability company;
(B) enforce the terms of the partnership agreement or operating agreement by litigation or otherwise; and
(C) defend, submit to arbitration, settle, or compromise litigation to which the principal is a party because of membership in a partnership or limited liability company;
(3) exercise in person or by proxy, or enforce by litigation or otherwise, a right, power, privilege, or option the principal has or claims to have as the holder of a bond, share, or other instrument of similar character and defend, submit to arbitration or mediation, settle, or compromise litigation to which the principal is a party because of a bond, share, or similar instrument;
(4) with respect to a business controlled by the principal:
(A) continue, modify, renegotiate, extend, and terminate a contract made by or on behalf of the principal with respect to the business before execution of the power of attorney;
(B) determine:
(i) the location of its operation;
(ii) the nature and extent of its business;
(iii) the methods of manufacturing, selling, merchandising, financing, accounting, and advertising employed in its operation;
(iv) the amount and types of insurance carried; and
(v) the mode of engaging, compensating, and dealing with its accountants, attorneys, other agents, and employees;
(C) change the name or form of organization under which the business is operated and enter into a partnership agreement or operating agreement with other persons or organize a corporation or other business entity to take over all or part of the operation of the business; and
(D) demand and receive money due or claimed by the principal or on the principal’s behalf in the operation of the business, and control and disburse the money in the operation of the business;
(5) put additional capital into a business in which the principal has an interest;
(6) join in a plan of reorganization, consolidation, or merger of the business;
(7) sell or liquidate a business or part of it at the time and upon the terms the agent considers desirable;
(8) establish the value of a business under a buy-out agreement to which the principal is a party;
(9) prepare, sign, file, and deliver reports, compilations of information, returns, or other papers with respect to a business which are required by a governmental agency or instrumentality or which the agent considers desirable, and make related payments; and
(10) pay, compromise, or contest taxes or assessments and perform any other act that the agent considers desirable to protect the principal from illegal or unnecessary taxation, fines, penalties, or assessments with respect to a business, including attempts to recover, in any manner permitted by law, money paid before or after the execution of the power of attorney.
SECTION 209. INSURANCE AND ANNUITIES. Language granting power with respect to insurance and annuities authorizes the agent to:
(1) continue, pay the premium or assessment on, modify, rescind, release, or terminate a contract procured by or on behalf of the principal which insures or provides an annuity to either the principal or another person, whether or not the principal is a beneficiary under the contract;
(2) procure new, different, and additional contracts of insurance and annuities for the principal and the principal’s spouse, children, and other dependents, and select the amount, type of insurance or annuity, and mode of payment;
(3) pay the premium or assessment on, modify, rescind, release, or terminate a contract of insurance or annuity procured by the agent;
(4) apply for and receive a loan on the security of a contract of insurance or annuity;
(5) surrender and receive the cash surrender value;
(6) exercise an election;
(7) change the manner of paying premiums;
(8) change or convert the type of insurance or annuity, with respect to which the principal has or claims to have a power described in this section;
(9) apply for and procure government aid to guarantee or pay premiums of a contract of insurance on the life of the principal;
(10) collect, sell, assign, hypothecate, borrow upon, or pledge the interest of the principal in a contract of insurance or annuity; and
(11) pay from proceeds or otherwise, compromise or contest, and apply for refunds in connection with, a tax or assessment levied by a taxing authority with respect to a contract of insurance or annuity or its proceeds or liability accruing by reason of the tax or assessment.
SECTION 210. ESTATES, TRUSTS, AND OTHER BENEFICIARY RELATIONSHIPS. Except as otherwise provided in Section 108(b), language granting power with respect to estates, trusts, and other relationships in which the principal is a beneficiary, authorizes the agent to act for the principal in all matters that affect a trust, probate estate, guardianship, conservatorship, escrow, custodianship, or other fund from which the principal is, may become, or claims to be entitled, as a beneficiary, to a share or payment, including to:
(1) accept,[reject, disclaim,] receive, receipt for, sell, assign, [release,] pledge,[or] exchange, [or consent to a reduction in or modification of] a share in or payment from the fund;
(2) demand or obtain by litigation or otherwise money or other thing of value to which the principal is, may become, or claims to be entitled by reason of the fund;
(3) initiate, participate in, and oppose litigation to ascertain the meaning, validity, or effect of a deed, will, declaration of trust, or other instrument or transaction affecting the interest of the principal;
(4) initiate, participate in, and oppose litigation to remove, substitute, or surcharge a fiduciary;
(5) conserve, invest, disburse, and use anything received for an authorized purpose; and
(6) transfer an interest of the principal in real property, stocks, bonds, accounts with financial institutions or securities intermediaries, insurance, annuities, and other property, to the trustee of a revocable trust created by the principal as settlor.
SECTION 211. CLAIMS AND LITIGATION. Language granting power with respect to claims and litigation authorizes the agent to:
(1) assert and prosecute before a court or administrative agency a claim, a claim for relief, cause of action, counterclaim, offset, or defense against an individual, organization, or government, including actions to recover property or other thing of value, to recover damages sustained by the principal, to eliminate or modify tax liability, or to seek an injunction, specific performance, or other relief;
(2) bring an action to determine adverse claims, intervene in litigation, and act as amicus curiae;
(3) in connection with litigation, procure an attachment, garnishment, libel, order of arrest, or other preliminary, provisional, or intermediate relief and use an available procedure to effect or satisfy a judgment, order, or decree;
(4) in connection with litigation, perform any lawful act, including acceptance of tender, offer of judgment, admission of facts, submission of a controversy on an agreed statement of facts, consent to examination before trial, and binding the principal in litigation;
(5) submit to arbitration or mediation, settle, and propose or accept a compromise with respect to a claim or litigation;
(6) waive the issuance and service of process upon the principal, accept service of process, appear for the principal, designate persons upon whom process directed to the principal may be served, execute and file or deliver stipulations on the principal’s behalf, verify pleadings, seek appellate review, procure and give surety and indemnity bonds, contract and pay for the preparation and printing of records and briefs, receive and execute and file or deliver a consent, waiver, release, confession of judgment, satisfaction of judgment, notice, agreement, or other instrument in connection with the prosecution, settlement, or defense of a claim or litigation;
(7) act for the principal with respect to bankruptcy or insolvency, whether voluntary or involuntary, concerning the principal or some other person, or with respect to a reorganization, receivership, or application for the appointment of a receiver or trustee which affects an interest of the principal in property or other thing of value; and
(8) pay a judgment against the principal or a settlement made in connection with litigation and receive and conserve money or other thing of value paid in settlement of or as proceeds of a claim or litigation.
SECTION 212. PERSONAL AND FAMILY MAINTENANCE. Language granting power with respect to personal and family maintenance authorizes the agent to:
(1) perform the acts necessary to maintain the customary standard of living of the principal, the principal’s spouse, children, and other individuals customarily or legally entitled to be supported by the principal, including providing living quarters by purchase, lease, or other contract, or paying the operating costs, including interest, amortization paym