One of the most frequent complaints to REPTL from probate lawyers in the 1990s was “don’t keep changing the power of attorney form.” Like the wall in the Game of Thrones, REPTL has resisted changes to the statutory durable power of attorney form since 1997. While the 1997 form had a good, long run, as in George R. R. Martin’s tomes, every so often the wildings scale the wall. The statutory durable power of attorney form will change effective January 1, 2014. This bill was not a REPTL bill, so do not blame REPTL for its passage.
The new power of attorney form (Tex. Est. Code Sec. 752.051) differs from the former in three principal ways:
- Initial, don’t cross out. It drops the approach of the former form, in which the principal crosses out any specific powers he or she does not wish to give to the agent, for an initialing approach, in which the principal initials powers he or she wishes to give to the agent. This approach is consistent with the 2006 version of the Uniform Power of Attorney Act. Texas had tried the initialing approach from 1993 to 1997, but dropped it in favor of the crossing-out approach in an attempt to prevent fraud and to reduce errors in self-help execution of powers of attorney.
- The form begins with a notice to the principal. The principal is warned that he or she should select someone he or she trusts and that the power of attorney will continue until the principal dies, the principal revokes it, the agent resigns or is unable to act or a guardian is appointed for the principal’s estate.
- The form ends with “Important Information for Agent.” The form makes extensive statements of the agent’s duties, the termination of the agent’s authority and the liability of the agent. To a large extent, these statements are consistent with the Durable Power of Attorney Act and fiduciary law. However, to the extent that the statements are not identical to current statutory law, does including these statements in the form create additional statutory or contractual duties and liabilities? If there are inconsistencies, which controls – existing law or the disclosure statements in the form?
In addition to increasing the chances of fraud (since it is easier for a bad guy to add initials to a form than to remove a cross-out mark), the new initialing approach creates these two traps for the unwary:
1. No automatic general power of attorney. The former cross-out form contains this statement:
If no power listed above is crossed out, this document shall be construed and interpreted as a general power of attorney and my agent (attorney in fact) shall have the power and authority to perform or undertake any action I could perform or undertake if I were personally present.
Tex. Prob. Code Sec. 490(a). The new form has no such provision. It permits the principal to initial line “N” – “all of the above powers listed in “A” through “M.” However, this does not make the power of attorney a general power of attorney and there is no similar provision stating that it means the agent has the power to perform or undertake any action the principal could perform or undertake if personally present. Rather, the agent’s authority apparently will be limited to the enumerated statutory powers even if “N” is initialed. For this reason, it is important for any attorney wishing for his or her client to have a general power of attorney to specifically add language to the form to accomplish this purpose.
2. What happens if no powers are initialed? Since these forms are used by non-lawyers, it is inevitable that powers of attorney will be signed with no powers initialed. What is the effect of this? Unless the principal adds specific authority in the “special instructions” section of the form, presumably the agent has no authority to act, even though the principal must have intended to give the agent some authority or he or she would not have signed the power of attorney in the first place.
As troublesome as the 2013 changes to the form are, they should present no insurmountable hurdle for attorneys familiar with this area of the law. Here are practice tips about the new form:
- Use the form. Although this is a matter of personal preference, having one’s clients sign a form that looks like the statutory form is likely to increase the likelihood of third party acceptance.
- Accept the initialing approach. Use of the statutory form is optional, so there is no reason why an attorney could not continue to use the crossing-out approach. However, in the controlled environment most attorneys create for document signings, it is not difficult to assure that clients initial the form at the appropriate place.
- Modify the form. Modify the form to include those powers which you believe your principal may need to have. For example, the form may expand on the power to make gifts, add the power to create trusts and transfer property to trusts, and clarify the agent’s authority to deal with governmental agencies.
- Make it a general power of attorney. Add language to make it clear that it is a general power of attorney.
- Specifically provide that it is to be construed as a statutory durable power of attorney. Even though the use of the statutory form is optional, it probably is advantageous to have the power of attorney construed to be a statutory durable power of attorney. This assures that the powers described in Tex. Est. Code Sections 752.101 – 752.114 are included in the power.
Here are the new statutory durable power of attorney forms for use beginning January 1, 2014 in Word and pdf formats. Here is the new form with modifications and enhancements by Glenn Karisch in Word and pdf formats.