NATIONAL DURABLE POWER OF ATTORNEY
SURVEY RESULTS AND ANALYSIS
Prepared
by Prof. Linda S. Whitton,
Co-Chair
of the Advisory Committee
to
the Joint Editorial Board for Uniform Trusts and Estates Acts,
National
Conference of Commissioners on
Dated
Durable Power of Attorney Survey Results and Analysis
Introduction
In
February 2002, the Advisory Committee to the Joint Editorial Board for Uniform
Trusts and Estates Acts presented its report on a comparative review of state
durable power of attorney legislation.
This study was conducted to ascertain:
a) how many jurisdictions have adopted the Uniform Durable Power of
Attorney Act (Uniform Act) in whole or in part; b) whether the legislative
enactments of adopting states include significant departures from the Uniform
Act; c) whether states that are not official adopters have integrated, in
language or spirit, components of the Uniform Act; and d) the emergence of
state legislative trends that are not embodied in the Uniform Act.
The
study found that while twenty-nine (29) jurisdictions (27 states, the District
of Columbia, and the Virgin Islands) are official adopters of the Uniform Act,
seventeen (17) of the twenty-three (23) states who are not official adopters
have incorporated into their statutes provisions substantially similar to those
of the Uniform Act. However, despite
this “core” uniformity, the study further revealed significant areas of
developing divergence. Conflicts and
potential conflicts between states appear in two contexts—subject areas in
which a growing number of states have enacted statutory provisions, but the
provisions diverge in approach, and subject areas where the Uniform Act is
silent and states are “filling in the blanks.”
Areas
of divergent state legislative provisions include:
Twenty-three (23) jurisdictions follow
the Uniform Act approach which provides that once there is a court-appointed
guardian or fiduciary, the attorney-in-fact is then accountable to both the
fiduciary and the principal; seventeen (17) provide that after court
appointment of a fiduciary the attorney-in-fact is accountable only to that
fiduciary; five (5) terminate the attorney-in-fact’s authority upon court
appointment of a fiduciary; and four (4) specify that the attorney-in-fact’s
authority actually supersedes that of a later-appointed fiduciary. Regarding a fiduciary’s authority to revoke a
DPA, thirty-four (34) jurisdictions follow the Uniform Act approach that the
fiduciary has the same power the principal would have had to revoke the agent’s
authority and six (6) require that a Court find sufficient basis for revoking
the attorney-in-fact’s authority.
Thirty-eight (38) jurisdictions follow
the Uniform Act approach that a durable power of attorney can be designated to
become effective upon the “disability or incapacity” of the principal. Nine (9) jurisdictions provide for other
variations on springing powers, and four (4) are silent on the topic. Seven (7) require a confirming affidavit by
the agent that the power has sprung.
Twenty (20) jurisdictions specifically
address agent authority to make gifts, and all but two (2) of these
jurisdictions provide for statutory default limitations on the authority. Statutory limitations vary considerably, but
in general, states are divided into two divergent groups—one that requires the
DPA to include specific authorization of gift making authority, and the other
that implies gift making authority if the agent is given broad authority
without specific limitations.
Sixteen (16) jurisdictions address the
issue of multiple agents. Two (2)
prohibit co-agents; one (1) requires that multiple agents act jointly; nine (9)
provide that the instrument can specify joint or several authority for multiple
agents, but that in the absence of specification the multiple agents must act
jointly; three (3) provide that multiple agents may act independently in the
absence of specification to the contrary; and one (1) does not provide a
default rule but states that the instrument can specify joint or several
authority.
Twelve (12) states provide for
revocation of a spouse-agent’s authority upon divorce, and four (4) actually
provide for revocation upon the filing of the petition. Five (5) also revoke authority upon legal
separation.
Nineteen (19) statutes address
fiduciary standards of care for agents, but the substance of the statutes
varies considerably—from minimal treatment which merely identifies the
attorney-in-fact as a fiduciary to those requiring the same level of care as a
trustee and specifying a list of duties.
With respect to remedies for breach of the agent’s duties, the statutory
provisions range from silence to rather extreme civil and criminal penalties.
Common
areas that are not covered by the Uniform Act, but which are addressed in an
increasing number of state statutes include:
Although
some variation exists in the foregoing provisions, the spirit of the provisions
is similar.
To
further assess developing trends and issues in durable power of attorney
legislative reform, the Advisory Committee prepared a survey which was
distributed to all probate and elder law sections of state bar associations, to
the leadership of the American College of Trust and Estate Counsel, the
National Academy of Elder Law Attorneys, and the ABA Section of Real Property,
Probate and Trust Law, as well as to special interest listserves of the ABA
Commission on Law and Aging. The
following report summarizes and analyzes the results of this survey.
Survey
Respondents
It
was not possible to formulate a statistical response rate due to the variety of
methods by which the survey was distributed; however, forty-four (44)
jurisdictions were represented in the 371 surveys that were returned. In an effort to gauge whether the type of
state statute influenced the nature of the responses, results were analyzed by
state groupings as well as in the aggregate.
States were grouped according to their degree of similarity to or
divergence from the Uniform Act. States
in the “General” category are those whose statutes are basically the same as
the Uniform Act. The thirteen (13) states
which comprise this group (AL, DE, HI, ID, IA, KS, MA, MI, MS, NV, OR, RI, WV)
represent 26% of total jurisdictions.
Thirty-five percent (35%) of the survey respondents were from the
General category. The ”Modified General”
category is comprised of states which basically follow the Uniform Act but
which have added a few additional specific provisions. This group includes eighteen (18) states
(AZ, DC, KY, LA, MD, MT, NE, NH, ND, NM, OH, OK, SC, SD, UT, VA, WI, WY), which
represent 35% of total jurisdictions, and 23% of the respondents to this
survey. The last category, labeled the
“Specific” group, includes the largest number of states—twenty (20)—and
represents those states which have enacted very specific, detailed provisions
either in addition to or instead of the provisions of the Uniform Act. This group represents 39% of all
jurisdictions and 42% of the survey respondents. The following chart summarizes participation
by state and state groupings:
Durable Power of
Attorney Survey – Participation by State
General States Modified General Specific
|
|
13 |
AZ |
4 |
AK |
* |
|||
|
DE |
13 |
DC |
11 |
AR |
3 |
|||
|
HI |
18 |
KY |
1 |
CA |
17 |
|||
|
ID |
32 |
LA |
3 |
CO |
6 |
|||
|
IA |
3 |
MD |
8 |
CT |
7 |
|||
|
KS |
4 |
MT |
* |
FL |
5 |
|||
|
MA |
2 |
NE |
11 |
GA |
6 |
|||
|
MI |
19 |
NH |
4 |
IL |
19 |
|||
|
MS |
6 |
ND |
* |
IN |
16 |
|||
|
NV |
2 |
NM |
5 |
ME |
6 |
|||
|
OR |
10 |
OH |
20 |
MN |
2 |
|||
|
RI |
8 |
OK |
* |
MO |
5 |
|||
|
WV |
1 |
SC |
* |
NJ |
4 |
|||
|
|
|
SD |
* |
NY |
13 |
|||
|
|
|
UT |
1 |
NC |
* |
|||
|
|
|
VA |
13 |
PA |
12 |
|||
|
|
|
WI |
4 |
TN |
11 |
|||
|
|
|
WY |
1 |
TX |
8 |
|||
|
|
|
|
|
VT |
4 |
|||
|
|
|
|
|
WA |
10 |
|||
|
13 states |
131 |
35%
of total responses |
18 states |
86 |
23%
of total responses |
20 states |
154 |
42%
of total responses |
|
|
|
|
|
|
|
|||
|
GRAND TOTAL – 371 |
|
|
|
|
||||
*
Responses were received from all but seven jurisdictions (AK, MT, NC,
ND, OK, SC, SD)
Overview of
Survey Responses
What
is most striking about the survey responses is that the percentage of
respondents who selected each option was nearly identical without regard to
state grouping affiliation. In other
words, the type of statute in effect in a particular jurisdiction appeared to
have little or no relationship to the preferences and opinions expressed by
survey respondents. Furthermore, there
was significant consensus demonstrated with respect to a number of areas
identified in the Committee’s first report as areas of growing statutory
divergence or enactment (e.g.,
authority of later-appointed fiduciaries, springing powers, authority to make
gifts, impact of divorce on authority of spouse-agent, fiduciary standards of
care, portability provisions, and sanctions for third party refusal to accept a
DPA).
The
following summarizes survey results by topic, reporting only the aggregate
results of the entire response pool unless there was significant variation in
the response percentages by state grouping.
Where questions asked respondents to indicate multiple answers if they
desired, percentages are based on the number of respondents answering that
specific question.
General
Questions about Durable Power of Attorney Practice
Number of POA
documents prepared annually?
Fewer than 25 25%
25 - 50 23%
51 - 100 29%
Greater than 100 23%
Majority of
POA documents are?
General durable powers 93%
Special limited powers
2%
Approx. equal numbers 5%
Client
preference for when POA effective?
Immediately 61%
Springing 23%
No trend 16%
Are you in
favor of statutory short forms?
Yes
59%
No
41%
Springing
Powers
Should DPA
statute authorize springing powers?
Yes 89%
No 11%
Should statute
require a confirming affidavit to activate springing powers?
Yes 74%
No 26%
Should statute
permit an affidavit to provide assurance to 3rd parties?
Yes 81%
No 19%
Who should be
the affiant?*
Health Care Professional 63%
Person designated in POA 58%
Agent
27%
*Although not
directed to, a number of respondents circled multiple answers.
Authority
to Make Gifts
Which should
be the default rule for making gifts?
No authority unless specifically
authorized 73%
Implied authority unless expressly
limited 27%
Should statute
specify default limitations on gift making authority?
Yes 67%
No 33%
Should statute
limit permissible recipients of gifts?
Yes 50%
No 50%
Should the
statute limit the types of organizations that are permissible recipients?
Yes, organizations to which
principal has made gifts or pledges 45%
No 33%*
Yes, only to IRS charitable
organizations 19%*
Yes, to organizations charitable or
otherwise 3%
*More of the
respondents in the Modified General grouping selected the response, “Yes, only
to IRS charitable organizations” than the “No” response to limitations.
Should the
statute limit the classes of persons who are permissible recipients?
No 47% Yes,
limit to principal’s spouse, committed partner, descendants,
spouses of descendants, descendants of partner, and parents 21%*
Yes, limit to principal’s spouse,
descendants, spouses of
descendants, and parents 15%*
Yes, limit to principal’s spouse and
descendants 9%*
Yes, limit to principal’s spouse,
descendants and parents 8%*
*There was a slight
preference in the Modified General grouping for the response which included
spouses of descendants, but omitted references to committed partners, and a
slight preference in the General grouping for the option which included parents
over the option limited to only the principal’s spouse and descendants.
Should the
statute specify a maximum amount for gifts?
No maximum 47%
Limit to $10,000 or current annual
gift tax exclusion 29%*
Limit gifts to agent to $10,000 or
current annual gift tax exclusion 24%*
*Respondents in the
General grouping had a slight preference for capping only gifts to agents at the
annual gift tax exclusion amount as opposed to a default limitation on all
gifts at the annual exclusion amount.
Should the
statute provide other guidance for making gifts?
Agent can make gifts on
principal’s behalf as determined
to be in principal’s best interest, estate’s best interest, or
that will reduce the estate tax payable on the principal’s death
and also be in accordance with the principal’s history of making
or joining in the making of lifetime gifts 51%
Nothing more is needed 36%
Agent can make gifts on principal’s
behalf as the agent shall
determine to be in accord with the principal’s personal history 13%
Authority
to Create, Revoke, or Modify Revocable Trusts
If the POA
gives the agent broad authority, which should be the default rule for revocable
trusts?
Agent can exercise principal’s
powers only to the extent expressly
authorized by the terms of the trust document or the POA 51%
Agent can exercise principal’s
powers unless limited in the POA,
but only to make revisions as the circumstances and facts
reveal the principal would have made 32%
Agent can exercise principal’s
powers unless authority is limited
in the POA 17%
The
Agent as Fiduciary
Should the
statute set forth a default standard of care for the agent?
Yes 89%
No 11%
Which of the
following should be the default standard of care?
Same fiduciary standard as Trustees 63%
Good faith 19%*
Due care/ordinary negligence 18%*
*There was a slight preference for the due care/ordinary
negligence standard over the good faith standard in the General grouping.
Should the
statute permit the principal to alter the default standard of care to provide
exoneration?
Yes 73%
No 27%
Choose all of
the following that you would favor for inclusion in statutory exoneration:
Agent not liable solely because the
agent
also benefits
from the act 84%
Agent not liable for loss due to
another
person’s error
of judgment or action 81%
At the principal’s election, agent will
only be
liable for
action undertaken in bad faith 73%
Agent not liable solely because the
agent has
conflicting
interests 71%
Agent not liable solely because the agent
acts in
a
different manner with respect to the
principal’s
and the agent’s individual
interests 50%
None of the above 16%
Should the
statute require notice by agent when no longer willing or able to act?
Yes 75%
No 25%
If yes, indicate
inclusions favored for a notice provision:
Notice to principal, and if
principal is incapacitated,
then to guardian, legal
representative,
or caretaker 91%
Notice to all 3rd parties
with whom agent has
transacted on behalf of
the principal 41%
Notice to principal only 20%
Third
Party Liability and Sanctions for Refusal to Accept Agent’s Authority
Ever
experience difficulty obtaining third party acceptance of an agent’s authority?
Yes, occasionally 63%
No 20%*
Yes, frequently 17%*
*Respondents in the
Specific grouping rated “Yes, frequently” slightly higher than “No.”
Would you
favor inclusion of a remedies or sanctions provision in all durable power of
attorney statutes?
Yes 74%
No 26%
If yes,
indicate all recommended provisions for inclusion in a remedies or sanctions
provision:
Attorney’s fees and court costs 87%
Civil penalty not to exceed $1000,
plus damages,
costs and fees 53%
Prejudgment interest on actual
damages 45%
Treble damages 18%
Would you
favor protecting third party reliance with a statutory presumption of validity?
Yes 92%
No 8%
Authority
of Later-Appointed Fiduciary or Guardian
If court
appoints a guardian, conservator, or other fiduciary for the principal, to whom
should an agent under a previously-executed power of attorney be accountable?
The fiduciary and the principal 58%
The fiduciary only 30%
The principal only 12%
Should a
court-appointed fiduciary have authority to revoke or amend the POA?
Only if court specifically grants
authority 61%
Yes 31%
No 8%
Should court
appointment of a fiduciary automatically revoke a previously executed POA?
No 64%
Yes 36%
Should the
agent’s authority under a POA supersede that of a later-appointed fiduciary?
No 68%
Yes 32%
Impact
of Divorce or Legal Separation on Authority of Spouse-Agent
Indicate all
of the following that should cause revocation of the spouse’s agency:
Divorce or annulment 84%
Filing a petition for divorce 73%
Legal separation 69%
None of the above 7%
If the
principal appointed a spouse’s relative as agent, who is not related to the
principal except by marriage, should divorce revoke the agency?
No 62%
Yes 38%
Portability
In your own
practice, have you ever experienced difficulty obtaining POA acceptance in
another jurisdiction?
No 65%
Yes 35%
Would you
favor a portability provision in all POA statutes?
Yes 97%
No 3%
If yes, which
of the following would you prefer?
POA is valid in this State if validly
executed under the laws of
another
state, but shall not authorize actions that are in
contravention
of laws of this State 62%
POA is valid in this State if validly
executed under the laws of
another
state 38%
Abuse
Have you, in
your own practice, encountered POA abuse by an agent?
Yes 64%
No 36%
If yes, which
best describes the total number of instances?
Fewer than 5 53%
Greater than 10 24%*
5 to 10 23%*
*Both the General and Modified General groupings rated the
category “5 to 10” slightly higher than “Greater than 10.”
Are you aware
of instances of power of attorney abuse by an agent outside the experience of
your own practice or work?
Yes 78%
No 22%
If yes, which
best describes the total number of instances?
Fewer than 5 45%
5 to 10 28%
Greater than 10 27%
Should POA
statute provide remedies and sanctions for agent abuse in addition to those
available under common or criminal law?
Yes 75%
No 25%
If yes, indicate
all you would include in a remedies or sanctions provision:
Agent to pay attorney’s fees and
costs 91%
Prejudgment interest 70%
Civil penalty not to exceed $1000,
plus
damages and costs 61%
Treble damages 40%
Disinheritance from principal’s
estate 37%
Should the POA
statute include safeguards against abuse by agent?
Yes 81%
No 19%
If yes,
indicate all of the following that you would include:
Certain classes of interested parties
have
standing to
seek court review of the
agent’s
actions when the principal is
incapacitated 89%
POA must be recorded when the principal
becomes incapacitated 41%
Agent must account to a 3rd
party when the
principal
becomes incapacitated 33%
Conclusion
Despite
the initial success of the Uniform Durable Power of Attorney Act (forty-five
(45) out of fifty-one (51) jurisdictions adopted in large part the core
provisions of the Act, whether officially or unofficially), currently only
thirteen (13) states have durable power of attorney statutes that are
completely faithful to the original Act.
Eighteen (18) states retain many of the Act’s provisions, but with
varying degrees of additions and modifications, and twenty (20) states have
enacted very subject specific durable power of attorney provisions. Despite the divergence in state law that
presently exists, results of a national durable power of attorney survey
indicate a high degree of consensus in areas where statutes conflict or are
silent. For example, there is over 70%
consensus on the following subjects which are not addressed by the Uniform Act:
Given
the legislative movement in twenty (20) states toward durable power of attorney
statutes that are more specific and detailed, this may be an opportune time to
revisit the Uniform Durable Power of Attorney Act. Based on the Committee’s research, the
environment appears conducive for revising the Act to address specific concerns
that are common across jurisdictions and to incorporate general principles
about which there appears to be consensus.
Absent revision of the Act, it is likely that there will be further disintegration
of uniformity if the remaining thirty-one (31) jurisdictions independently
engage in statutory reform.