An important part of estate planning is anticipating the possibility that you could become incompetent or otherwise unable to handle your financial affairs. As a result of these possibilities, we always recommend that you execute a Durable Power of Attorney for Property. A Durable Power of Attorney for Property is a legal document in which you designate an agent to handle your financial affairs. A Power of Attorney is “durable” if it expressly states that it survives your incompetency. On December 21, 2011, Ohio adopted the Uniform Power of Attorney Act (“UPOAA”) with a few additional provisions exclusive to Ohio powers of attorney.
UPOAA was created as a result of a national study in 2002 which revealed that a number of states had different power of attorney laws. The study concluded that over half of the states had enacted their own laws dealing with specific matters on which UPOAA was silent. These topics included the authority to make gifts, standards for agent conduct and liability when using a power of attorney, the authority of multiple agents, execution requirements of the power of attorney, sanctions for third parties dishonoring powers of attorney, and restrictions on powers of an agent which could change an individual’s estate plan. In order to provide more uniformity among the states, the new UPOAA was created.
The new UPOAA consists of four articles. Article 1 contains all general provisions pertaining to the creation and use of a power of attorney. Article 2 provides default definitions for various areas of authority that can be granted to an agent. Article 3 contains an optional statutory form of a Durable Power of Attorney for Property. Article 4 contains miscellaneous provisions concerning the relationship of UPOAA to other laws and pre-existing powers of attorney.
In addition to adopting UPOAA, the new Ohio power of attorney law allows you to determine whether your agent has the following powers:
- to create a living trust;
- to amend or revoke an existing living trust;
- to make gifts of property;
- to create or change rights of survivorship in property;
- to designate or change beneficiary designations on bank accounts, brokerage accounts, life insurance policies, annuities, and retirement accounts; and
- to elect or change a retirement payment plan.
The new Ohio law provides that an agent shall have an overall duty to attempt to preserve the provisions in your estate plan, as well as the following duties:
- to do what you know the principal reasonably expects you to do with the principal’s property or to act in the principal’s best interest if you do not know;
- to act in good faith;
- to do nothing beyond the authority granted in the Power of Attorney;
- to act loyally for the principal’s benefit;
- to avoid conflicts that would impair the agency’s ability to act in the principal’s best interest;
- to act with care, competence, and diligence;
- to keep records of all receipts, disbursements, and transactions made on behalf of the principal;
- to cooperate with any person that has authority to make healthcare decisions for the principal; and
- to disclose your identity as an agent whenever you act for the principal by signing your name as an agent as follows: John Smith, by James Smith, as Agent.
As a result of this new law, it is critical that you have your estate planning attorney review and amend your current Durable Powers of Attorney for Property to make sure that they are in compliance with the new law. If you do not have a current Durable Power of Attorney for Property, now is a good time to establish one and make sure that the Durable Power of Attorney for Property complies with the new Ohio law.
NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.
James F. Contini II, Esq.
Certified Specialist in Estate Planning,
Trust & Probate Law by the OSBA
Krugliak, Wilkins, Griffiths & Dougherty Co., LPA
158 North Broadway
New Philadelphia, Ohio 44663