Financial Powers of Attorney

Recent Changes to Durable Power of Attorney Statute

by Rania Combs

The legislature made several beneficial changes to the Durable Powers of Attorney statute that went into effect on September 1, 2017. Below are a few of the most significant changes:

  1. Prior to September 1, 2017, financial institutions routinely rejected financial durable powers of attorney for a myriad a reasons. The statute now identifies eleven specific grounds on which a financial institution may reject a power of attorney, such as if the financial institution has actual knowledge that the power has been revoked. Barring those reasons, the financial institution must accept the power or (1) request an agent’s certification; (2) request an attorney opinion; or (3) request an English translation of a power of attorney in another language within a specific amount of time.
  2. Under the prior statute, only the principal or an appointed guardian had the standing to initiate a proceeding to determine whether the agent is acting improperly.  The statute now permits actions to construe a power of attorney or review the agent’s conduct by: (1) the principal or agent, (2) a guardian or fiduciary of the principal, (3) a person named as a beneficiary to receive the property on the principal’s death, (4) a government agent, or (5) any other person who demonstrates to the court sufficient interest in the principal’s welfare or estate.
  3. The new notice at the beginning of the statutory form makes it clear that if a principal wants the agent to have the ability to execute home equity loan documents, the principal must sign the power of attorney in the office of a lender, an attorney, or a title company.
  4. The statute provides that an agent may take the following actions on the principal’s behalf or with respect to the principal’s property only if the power expressly grants them:
    1. Create, amend, revoke, or terminate an intervivos trust;
    2. Make a gift;
    3. Create or change rights of survivorship;
    4. Create or change beneficiary designations; or
    5. Delegate authority granted under the power of attorney.

    Unless the power of attorney provides otherwise, an agent who is not an ancestor, spouse, or descendant of the principal may not create in the agent (or a person to whom the agent owes an obligation of support) an interest in the principal’s property. Additionally, unless the power expressly provides otherwise, the power to make gifts is limited to amounts within the annual gift take exclusion (or twice that amount if the principal’s spouse agrees to split gifts).

  5. The statute explicitly provides that an agent may only make gifts if they are consistent with the principal’s objectives if those are known, or consistent with the principal’s best interests.

Next up is the Medical Power of Attorney statute. A new statutory medical power of attorney form goes into effect on January 1, 2018. The primary difference between the current and new form is that the disclosure statement that precedes the medical power of attorney is now included as part of the power of attorney. Additionally, the disclosure statement makes it clear that an appointment of a spouse is revoked if the marriage is dissolved, annulled, or declared void unless the power of attorney states otherwise.

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  1. Geraldine Gough Lavallee

    September 25, 2019 at 9:48am

    For purposes of revoking a Texas medical POA, what is the definition of incapacitated? Do you need a court order(guardianship) to be considered incapacitated? Would a doctor’s certificate, written months ago when you are really sick, stated that you were incapacitated, make you “legally” incapacitated with regard to revoking a Texas medical POA—especially when you have mental capacity to enter into a contract.

    1. Rania Combs

      October 14, 2019 at 10:46am

      A medical power of attorney can be revoked by the principal at any time, whether in writing or orally. Specifically, the medical power of attorney statute says that the power can be revoked without regard to whether the principal is competent.