ElderLaw News

ElderLaw News is a weekly e-newsletter that brings you reports of legal developments and other trends of vital interest to seniors and their advocates. This newsletter is brought to you by The Estate Planning & Elder Law Firm, P.C., William S. Fralin, Esq., President.

The Virginia Uniform Power of Attorney Act

The Virginia Uniform Power of Attorney Act (“UPOAA”; “the Act”) has been enacted by the Virginia General Assembly and signed by the Governor. The Act will have a significant impact on laws related to the use and acceptance of durable powers of attorney (“DPA”) in Virginia.

The enactment of this important bill represents an effort to bring uniformity to an area of law that has been rapidly emerging as a significant, if not vital, estate planning tool. The UPOAA will also provide greater protections for third parties at a time when a dramatically increasing amount of the nation’s wealth is being managed under DPAs because of the aging of the baby boomer generation. Current Virginia law is inadequate to meet those needs.

A DPA is legal document that grants authority to an agent to act on behalf of a principal, and it provides for the continuation of that authority in the event the principal suffers a subsequent disability or incapacity. As the popularity of DPAs continues to increase, so has litigation related to their use. Unlike guardianships and conservatorships, DPAs require little to no oversight. Therefore, financial exploitation by unscrupulous agents is a widespread problem.

DPAs are governed by state law, and those laws vary substantially. In 2002, the National Conference of Commissioners on Uniform State Laws (“NCCUSL”) conducted a survey comparing state DPA statutes. The study revealed many issues related to DPAs that needed to be addressed, including (1) improving portability, (2) including safeguards, remedies, and sanctions for abuse by an agent, (3) protecting the reliance of a third party on a DPA, and (4) including remedies and sanctions for third party refusal to honor a DPA.

As a result of this survey, in 2006 the NCCUSL adopted and promulgated the UPOAA. The UPOAA is an endeavor by NCCUSL to “codify both state legislative trends and collective best practices, and strike a balance between the need for flexibility and acceptance of an agent’s authority by third parties and the need to prevent and redress financial abuse.” The UPOAA seeks to preserve DPAs as a low-cost, flexible, and private form of surrogate decision making while at the same time attempting to prevent and redress financial abuse of incapacitated individuals. The UPOAA is basically a set of default rules that preserve a principal’s freedom to choose both the extent of the agent’s authority and also the rules that govern the agent’s conduct. While the UPOAA substantially clarifies Virginia law related to DPAs, it also makes several key changes to the law.

A few of those changes are the following:

-- All powers of attorney are presumed durable unless stated otherwise in the document.

-- The UPOAA provides protections for third parties who in good faith accept a purportedly acknowledged power of attorney. To promote the acceptance of powers of attorney, the UPOAA places the risk that a power of attorney is invalid upon the principal rather than the third party; however, the risk of loss for a forged DPA rests with the third party who accepted it rather than the purported principal.

-- The UPOAA rejects an imputed knowledge standard for those individuals who conduct activities through employees; however, third parties must use commercially reasonable systems to disseminate information among employees in order to receive protections under the UPOAA.

-- The UPOAA provides sanctions against third parties for their unreasonable refusals of DPAs.

-- The UPOAA identifies certain powers (e.g., gifting, changing designations of beneficiary) that must be specifically granted.

Since its inception in 2006, the UPOAA has been enacted in Idaho, New Mexico, Colorado, Maine, Nevada, and the U.S. Virgin Islands. Maryland and Minnesota, along with Virginia, introduced bills in their legislatures in 2010. Additionally, bar associations in Alabama, Massachusetts, and Ohio are currently studying the UPOAA.

For more information on the UPOAA, visit www.nccusl.com.

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The Estate Planning & Elder Law Firm, P.C.

The Estate Planning & Elder Law Firm, P.C. is an elder law firm. We represent older persons, disabled persons, their families, and their advocates. The practice of elder law includes estate planning, estate and trust administration, powers of attorney, advance medical directives, titling of assets and designations of beneficiaries, guardianships, conservatorships, and public entitlements such as Medicaid, Medicare, Social Security, and SSI, disability planning, income tax planning and preparation, care management, and fiduciary services. For more information about The Estate Planning & Elder Law Firm, P.C., please visit our website at http://www.chroniccareadvocacy.com.

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