Pennsylvania Revised Power of Attorney Requirements Take Effect
Pennsylvania recently enacted sweeping new changes to the laws governing Powers of Attorney used for financial and property transactions in Pennsylvania. Act of July 2, 2014, Pub.L. 855, No. 95 (“Act 95”) amends Chapter 56 of the Pennsylvania Estates and Fiduciaries Code, 20 Pa.C.S. §§ 5601-5612, and applies to these types of Powers of Attorney executed after January 1, 2015. Among the important changes are revisions to the language providing notice to the principal and agent, new rules governing witness and notarization requirements, new provisions governing express powers which can be granted by the principal, and rules governing the reliance on Powers of Attorney by third-parties, including banks and brokerage firms.
Act 95 amends the notice requirements applicable to both principal and agent. The language of the notice itself has changed, and is found in Section 5601(c) and Section 5601(d). Relative to the principal, the notice must appear in capital letters, and must follow the language of Section 5601(c) exactly. Without the notice, the power of attorney is not per se invalid but the burden of proof may shift to the agent to prove that the Power of Attorney is valid. Prior to Act 95, an agent did not have authority to act under a Power of Attorney unless he or she acknowledged the notice by signature, and this is unchanged under Act 95.
Act 95 also provides that a Power of Attorney must be notarized. Prior to Act 95, notarization of the Power of Attorney was not required. Act 95 also requires that the Power of Attorney be witnessed by two individuals, who are competent and over the age of 18. A witness cannot be the agent, the notary, or the person signing the Power of Attorney on the principal’s behalf, if applicable.
Important changes were also made by Act 95 to specific powers which may or may not be granted by the principal. These changes were enacted in response to concerns about a “one-size fits all” Power of Attorney, where prior to Act 95, agents may have been granted the broad authority by the principal to perform any act that the principal may herself perform. Pursuant to Section 5601.4(a), these so called “hot powers” must be expressly authorized by the principal or they are not valid. A principal may expressly grant the power to: (1) create, amend or revoke an inter vivos trust; (2) make a gift; (3) create or change rights of survivorship; (4) create or change a beneficiary designation; (5) delegate authority under a power of attorney; (6) waive the principal’s right to be a beneficiary of a survivorship right under a retirement plan; (7) exercise fiduciary powers; or (8) disclaim property.
Act 95 also governs the actions that must be taken by third-parties who may rely on the Power of Attorney. Pursuant to Act 95, the third-party must either accept a power of attorney, or must request an affidavit (relating to proof of continuance of Powers of Attorney by affidavit), or must request a certification, translation or an opinion of counsel, within seven business days. The third-party may liable pursuant to Section 5608.1(c), which provides for civil pecuniary liability for the harm suffered, if it rejects a Power of Attorney, but takes no further action within that time period.