REBECCA A. HOBBS
Rebecca A. Hobbs, Esq., is an associate attorney with the law firm O’Donnell, Weiss & Mattei, P.C. Ms. Hobbs focuses her practice in elder law, special needs planning, estate planning, estate and trust administration, and Veteran’s benefits. Ms. Hobbs is accredited as a United States Veterans Administration Attorney. She is also a member of the National Academy of Elder Law Attorneys (NAELA) and the Pennsylvania Association of Elder Law Attorneys (PAELA). She is an active member of the Montgomery County Bar Association and the Pennsylvania Bar Association (PBA). She serves on the PBA Charitable Organizations Committee and the PBA Legal Services to Persons with Disabilities Committee. She is also a graduate of the Tri-County Chamber of Commerce Leadership Class of 2013-2014. As an elder law attorney Ms. Hobbs is able to provide exceptional legal guidance while also understanding the sensitivity and compassion needed for assisting families in a time of crisis. Ms. Hobbs resides in Phoenixville with her husband and two children.
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The material in this publication was created as of the date set forth above and is based on laws, court decisions, administrative rulings and congressional materials that existed at that time, and should not be construed as legal advice or legal opinions on specific facts. The information in this publication is not intended to create, and the transmission and receipt of it does not constitute, a lawyer-client relationship.
Pennsylvania’s New Law on Powers of Attorney:
On July 2, 2014, Act 95 was signed into law. Act 95 was a result of House Bill 1429. Act 95 changed Chapter 56 of Title 20 of the Pennsylvania Consolidated Statutes, the statute that governs powers of attorney for financial and property transactions. Portions of the new law were effective immediately upon the signing of the new law. Primarily, the provisions which were immediately effective relate to third-party liability and the acceptance of power of attorney documents by third-parties. However, the majority of the provisions of the new law became effective as of January 1, 2015.
1. Notice and Acknowledgement: Prior to the enactment of the new law, the old law also had a requirement that the principal sign a Notice provision which is the first page of the power of attorney document. The Notice provision is dictated by Chapter 56 of Title 20 of the Pennsylvania Consolidated Statutes. Under the new law, Act 95, the Notice that the principal is required to sign has been modified. The modifications add language warning the principal that the document may grant his or her agent the power to give away all of the principal’s assets during the principal’s life and/or the power to change the distribution of the principal’s assets upon death. Additionally, the new Notice advises the principal to seek the advice of an attorney prior to signing the power of attorney document. Along with the changes to the Notice, the Acknowledgment that the principal’s agent is required to sign has also been modified. The Acknowledgement by the agent was required under the old law; however the wording of the Acknowledgement has been changed under the new law. The new law now requires that the agent acknowledge that he or she will act in accordance with the principal’s reasonable expectations and best interests. Additionally, the agent must acknowledge that he or she will act in good faith and only within the scope of authority granted by the principal with the power of attorney document.
2. Execution of Powers of Attorney: Under the old law, there was no requirement that a power of attorney be witnessed unless the power of attorney was executed by mark or by another individual at the direction of the principal. Additionally, the power of attorney only needed to be notarized in specific circumstances. The new law changes the execution requirements for power of attorney documents and now requires that the document be notarized and witnessed by two individuals. The agent cannot sign as a witness or notary. OWM Law had made it our practice to have all of our power of attorney documents notarized and witnessed by two witnesses prior to the enactment of the new law.
3. Agent’s Duties: Under the new law, agent’s duties are divided into mandatory duties that apply in every situation and default duties that the principal can waive in appropriate circumstances. The mandatory duties that apply in every situation include, the duty to act in accordance with the principal’s reasonable expectations, the duty to act in the principal’s best interest, the duty to act in good faith, and the duty to act within the scope of the powers granted to the agent by the principal through the power of attorney. Attorneys now must carefully draft the provisions related to agent’s duties as there are duties that the principal may want to waive. For example, the principal may wish to waive the duty of the agent to keep the agent’s and principal’s funds separate, or to keep a record of all receipts, disbursements and transactions of the principal’s funds.
4. Powers Granted to an Agent: One of the most significant changes under the new law is the limitations of an agent under a power of attorney to take certain actions unless the authority to take that action has been expressly granted in the power of attorney document. These express powers are often called “hot powers.” Theses “hot powers” include the power to gift; the power to create, amend or terminate an inter vivos trust; the power to change or create beneficiary designations; the power to change, create or waive right of survivorship; the power to disclaim an inheritance; and, the power to delegate the agent’s authority. If you want your agent to have any of these “hot powers” the authority must be expressly granted in your power of attorney document. Your power of attorney document must be carefully drafted to fit your individual needs and estate plan. There are circumstances where it is very important these “hot powers” be granted to your agent; however, there also may be circumstances where you would not want to grant these powers to your agent. Under the new law, the attorney drafting your power of attorney document must carefully explain these powers to you and create a document that is tailored to your individual needs.
5. Third Party Acceptance, Reliance and Liability: The new law also addresses a 2010 Pennsylvania Supreme Court ruling in the case of Vine v. Commonwealth of Pennsylvania State Employees’ Retirement Board (607 Pa. 648, 9 a.3d 1150), which held that a third party was liable for relying on and thus permitting an agent to act under a power of attorney that on its face was valid but which was later determined to be void due to the principal’s incapacity at the time the power of attorney document was signed. For obvious reasons, this case resulted in many third parties refusing to accept and rely on powers of attorney presented to them. The new law contains protection for third parties who rely on powers of attorney. This protection became immediately effective upon the new law being signed. The new law provides immunity to third parties who rely on a power of attorney in good faith, even if the power of attorney is later found to be invalid or revoked.
The new law also provides third-parties with the option to request that the agent certifies that the power of attorney has not been revoked or otherwise terminated. An agent can also be required to obtain an opinion letter from an attorney as to whether the agent is acting within the scope of the authority granted under the power of attorney document. The new law also provides timelines on requests from third parties; the third party has seven (7) business days to decide whether they will accept the power of attorney or whether they will request a certification or letter from an attorney. If the third party decides to request more information, they have five (5) days from the date of the receipt of the requested information to accept the power of attorney or to request additional information. The third party must have a substantial basis for making additional requests of information. If a third party refuses to accept a power of attorney and does not have a proper basis to do so, the third party may be held civilly liable.
It is important to note that the new law’s requirements regarding the notice, acknowledgement, notarization, and the provisions relating to agent’s duties do not apply to a power of attorney that is specifically for making health care decisions.
Although the new law does not affect power of attorney documents executed prior to the effective date of the new law, it is prudent to have your existing power of attorney documents reviewed by your attorney to ensure that your documents comply with the new law. Often it is advisable to update your existing power of attorney documents. Call our office at (610) 323-2800 to schedule an appointment to review your power of attorney documents.
Also, please watch OWM's March 2015 Legal Talk program regarding How Pennsylvania's New Law on Powers of Attorney Impacts You on our website here.
David A. Megay, Esq., speaking at Chester County Night School Seminars (6:30p.m.-8:30p.m.) at Owen J. Roberts High School, Pottstown, PA, on 3/25/15 entitled "Starting Your Own Business" and on 4/29/15 entitled "Buying and Selling Real Estate in PA" (contact Chester County Night School at 610-692-1964 or online at www.chestercountynightschool.org).
Kathleen M. Martin, Esq., speaking at Chester County Night School Seminars at West Chester B. Reed Henderson High School, West Chester, PA, on 3/25/15 entitled "Elder Law Issues"; and at Owen J. Roberts High School, Pottstown, PA, on 4/8/15 entitled "Elder Law Issues"; and at Owen J. Roberts High School, Pottstown, PA, on 4/22/15 entitled "Beyond the Simple Will" (contact Chester County Night School at 610-692-1964 or online at www.chestercountynightschool.org).
Watch Legal Talk, brought to you by OWM, on PCTV, Tuesdays at 8:30 on Channel 28, and Thursdays at 9:30 p.m. on Channel 98, or on our website here.
Read Legal Ease every first and third Sunday in the Pottstown Mercury.