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Power of Attorney (POA). MT199001HR February 2012. 1. MontGuide. www.montana.edu/estateplanning. 2. 2. Marsha Goetting Professor, Extension Family Economics Specialist Montana State University. Authors. Edwin Eck Professor, School of Law, University of Montana. 3.

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power of attorney poa
Power of Attorney (POA)

MT199001HRFebruary 2012

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MontGuide

  • www.montana.edu/estateplanning

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marsha goetting professor extension family economics specialist montana state university
Marsha GoettingProfessor, Extension Family Economics SpecialistMontana State University

Authors

  • Edwin EckProfessor, School of Law, University of Montana

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Why have a POA?

  • To designate another person to act on your behalf, if necessary

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Definition Terms

  • Principal
  • Agent
  • Entities

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Example: Sara, a homebound elderly mother

  • Wants her daughter to have authority to:
    • Write checks on her behalf
    • Make other financial decisions in the future

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Montana Uniform Power of Attorney Act

  • Effective October 1, 2011
  • Provisions for Creation provides Safeguards

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Form

  • Montana Statutory Power of Attorney
  • Agent’s Certification as to the Validity of Power of Attorney and Agent’s Authority

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Naming an agent

  • Only the principal can decide who should serve as agent
    • Must be trustworthy to fulfill the responsibilities of POA

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Avoid Naming an Agent

  • Ill
  • Difficulty managing money
  • Inexperienced with financial matters

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responsibilities of agent
Responsibilities of Agent

Principal should inform agent what authority (power) has been given in the POA form

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important information for agent
Important Information for Agent

Agent’s Duties & Circumstances

Potential liability for any losses caused by agent’s violations

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List of transaction categories that can be included in the agent’s general authority

Page 2 of MontGuide

The Montana Uniform Act provides:

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Real property

Tangible personal property

Stocks & Bonds

Commodities & Options

Banks & other financial institutions

List of Transaction Categories

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Operation of entity or business

Insurance & Annuities

Estates, trusts & other beneficial interests

Claims & Litigation

List of Transaction Categories, cont’d.

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Personal & family maintenance

Benefits from government programs

Civil or Military Service

Retirement Plans

Taxes

List of Transaction Categories, cont’d.

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additional powers
Additional Powers

Create, amend, revoke, or terminate a revocable living trust

Make a gift

Create or change right of survivorship

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additional powers con d
Additional powers con’d.

Waive the principal’s right to be a beneficiary of a joint and survivor annuity

Including survivor benefit from retirement plan

Disclaim property

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agent is not permitted to
Agent is notpermitted to:

Write a will

Represent the principal in court

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Authority to more than one person?

  • Principal may designate two or more persons to act as:
    • Coagents
      • Use authority independently

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Consequences of giving authority to coagents

  • Disagree about action
    • May result in attorney’s fees & court costs

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Successor Agent

  • Principal may designate a Successor Agent, if the original agent:
      • Resigns
      • Dies
      • Becomes incapacitated
      • Is not qualified to serve
      • Declines to serve

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Successor Agent Authority

  • Has same authority that was given to the original agent

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Authority for Health Care Decisions

  • If same person is to serve both capacities:
    • Principal could use one POA

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Example of Health Care POA

  • Montana Department of Public Health & Human Services
    • www.dphhs.mt.gov/sltc

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What makes a POA valid?

  • Signed by:
    • Principal
    • By another individual within the principal’s presence who is directed to sign the principal’s name

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Notarized Form

  • Genuine signature
    • Acknowledged signature before notary public

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When is a POA effective?

  • When it is signed
    • Unless the principal provides instruction otherwise

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Springing Power

  • “Springs into” existence upon the conditions stated by principal

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How long does POA last?

  • Until principal’s death

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Does an agent get paid?

  • Yes, unless the POA states otherwise
        • Reimbursement of expenses
        • Reasonable compensation

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District Court Review

  • Agent who is found liable for breaching duties is responsible for:
    • Restoring its value
    • Repayment of attorney’s fees & court costs

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Court-appointed

  • Guardian
    • Takes care of the incapacitated person
  • Conservator
    • Manages the financial affair of incapacitated person

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Appointment of a guardian and/or conservator

  • Is not automatic
  • Hearing must be held in district court
  • More costly than POA

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Durable Power of Attorney

  • POA is considered durable unless the document specifically states otherwise

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Revoke a POA

  • Signing a document that indicates that POA is revoked
    • “I hereby revoke my Power of Attorney dated January 12, 2012, naming John Jones as my agent”

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Prior POAs

  • Should be destroyed because signing a new POA does not automatically revoke a previous one

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Revocation

  • A revocation statement could be added to:
    • Special Instruction Section of POA

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Financial Entities

  • Notified of the POA revocation
    • Principal may be legally bound by agent’s actions

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What if a POA was signed before the Montana Uniform POA Act became effective on Oct. 1, 2011?

  • Still effective if:
    • Met requirements of previous law

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Is a POA written in another state valid in Montana

  • Yes if,
    • Complied with laws of the other state

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Method for Agent to Prove Authority

  • Form
    • Agent Certification as to the Validity of Power of Attorney & Agent’s Authority

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What if Entity Refuses to Honor POA?

  • After presented by agent, entity is required to accept the POA:
      • No later than 7 business days

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Social Security Benefits under POA

  • POA is not accepted for the management of Social Security beneficiary benefits
  • SSA recognizes only a representative payee

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Social Security Booklet

  • A Guide for Representative Payees
  • Call
    • 1-800-772-1213
  • Online:
    • www.ssa.gov

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Summary

  • POA can provide a low-cost private alternative to guardianship or conservatorship

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Summary

  • A POA should be reviewed annually to assure that it meets the principal’s needs

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MontGuide

  • www.montana.edu/estateplanning

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