Pennsylvania toughens power-of-attorney protections

By Brian Caffrey of Scaringi Law posted in Estate Planning on Thursday, June 25, 2015.

Pennsylvania's law governing powers of attorney - grants by one person, the principal, to another person, the agent, of the authority to make decisions on behalf of the principal - has long listed what that agent has the power to do.

Until recently, however, the law lacked language about the responsibility of the agent to act in the principal's best interest.

But make no mistake: even with these amendments, there is no substitute for working with an experienced attorney to ensure that your wants, needs and objectives are met.

Holding agents accountable

Powers of attorney entrust certain decisions to others when you can no longer make them for yourself. Someone you select will be able to take actions such as paying bills, making financial decisions and ensuring that you receive an appropriate level of personal and/or medical care. In legal terms, you are the "principal,'' assigning these powers to your "agent."

Under Pennsylvania's amendments to the power-of-attorney statute, which took effect January 1, 2015, the agent is specifically obligated to carry out all actions under powers of attorney in accordance with the best interests of the principal. For example, a new section of the statute requires the agent "to act in accordance with the principal's reasonable expectations to the extent they are actually known," and when those expectations are unknown, to act in the principal's "best interest." There are too many circumstances in which agents, upon the principal's incapacity, begin to act in their own best interests. For this reason, choosing an agent carefully is of paramount importance.

Also, the statute obligates the agent to act "in good faith" and "only within the scope of authority granted in power-of-attorney." The agent must act "loyally for the principal's benefit" as well.

The statutory changes bar the agent from creating a conflict of interest that "impairs the agent's ability to act impartially in the principal's best interest."

Another new provision limits gifts that an agent may make of the principal's property. An agent may make a gift of the principal's property only if the agent determines that this is consistent with the principal's objectives, if known. If those objectives are unknown, making the gift must be in the principal's best interest, based on "all relevant factors."

Finally, the amendments place new limitations on the powers of agents who are not ancestors, spouses or descendants when it comes to granting themselves or others any interest in the principal's property.

When considering relatives as agents under a power of attorney, the guiding principle should be selecting the person most willing and able to care for you and your property as you have directed, all while acting selflessly and with the utmost respect and trust.

By themselves, the amendments are far from foolproof. Many elder abuse cases involve theft of assets, and unfortunately these actions cannot be stopped by mere words in a code of law.

Protecting clients

In drafting powers of attorney for our clients at Scaringi Law P.C., we always take the time to gain a full understanding of their circumstances and objectives. We urge all of our clients to remain in communication with us and to let us know if they have concerns about the power-of-attorney arrangement and how it is working.

An older person's circumstances can change quickly - often faster than even they realize. This is why we recommend never putting off making these all-important legal decisions regarding powers of attorney, as well as wills, estate planning, trusts, living wills and appointment of health care agents.

For clients, there is a certain the peace of mind that comes from knowing they have done all they can to ensure proper disposition and management of their assets, even if they should become incapacitated. Meanwhile, their loved ones are freed from some of the burden of making weighty decisions during moments of crisis.

To learn more about how Scaringi Law attorney Brian C. Caffrey can help you, call him toll-free at 877-LAW-2555 or email him at info@scaringilaw.com

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