Powers of Attorney- What You Need to Know About the Current Requirements and Upcoming Changes

The 2013 Minnesota Legislature passed legislation modifying and clarifying the Minnesota Statutory Short Form Power of Attorney (“SSF POA”), which is found in Minnesota Statutes § 523.23. This article will focus on what a power of attorney can and cannot do, the four parts of the SSF POA, and the changes and clarifications thereto.

WHAT IS A POWER OF ATTORNEY?

A very common way for individuals to appoint someone else to act on their behalf is through a power of attorney. A power of attorney is a written document by which a mentally competent adult can grant another competent adult authority to act on his or her behalf. In general, the person granting authority to act is the “principal” and the person who is granted authority to act is the “attorney-in-fact.” In Minnesota, a power of attorney is considered either a “statutory short form power of attorney” or a common law power of attorney. This article focuses on the Minnesota statutory short form, relating to powers over property and money. Note that powers of attorney can be used for other purposes, such as health care decisions, which purposes will not be addressed in this article.

CURRENT MINNESOTA STATUTORY SHORT FORM POWER OF ATTORNEY (SSF POA)

The SSF POA has four parts. The first part allows a principal to grant one or more attorneys-in-fact broad statutorily defined powers. Note that in order to validly grant power to conduct real estate transactions, a legal description must be listed in this first part, NOT just the street address. A principal indicates in the second part whether the power of attorney remains effective if the principal becomes mentally incompetent. The third part deals with the power to transfer the principal’s property to the attorney-in-fact and the fourth part is where the principal can require the attorney-in-fact to make an accounting to the principal beyond the attorney-in-fact’s general responsibility to keep records, as required by law.

Currently, a SSF POA must be accepted if the following three elements are met: (1) the statutory form is duplicated exactly; (2) the first, second, and third parts are properly completed; and (3) it contains the attorney-in-fact’s specimen signature (note: the specimen signature does not need to be notarized). Although a power of attorney that does not satisfy the SSF POA requirements may be accepted as a common law power of attorney, refusing to accept a power of attorney that does not meet these requirements does not render the refusing party liable to the principal. The current statutory form also includes options for one or more successor attorney(s)-in-fact, an expiration date, and additional attorney-in-fact accounting responsibilities. However, the failure to complete or choose any of these options does not render a SSF POA invalid.

Importantly, refusing to accept a SSF POA that meets the three elements listed above exposes the refusing party to liability, unless the refusing party has actual knowledge or notice that: (1) the power of attorney was revoked, (2) the principal has died, or (3) the principal was judicially determined legally incompetent and the power of attorney was not drafted to survive the principal’s incompetency. A refusing party is also not liable for refusing to accept a power of attorney that is of limited duration and has expired.

MINNESOTA LEGISLATIVE UPDATE

A new statutory short form will be made available and must be used starting January 1, 2014. Powers of attorney executed prior to January 1, 2014, utilizing the current SSF POA, will remain valid.

The new form will include explanatory notices explaining the rights and responsibilities of principals and attorneys-in-fact. A party can refuse to accept a power of attorney executed after January 1, 2014, which does not have this notice executed by the attorney-in-fact, without exposure to liability.

The new form will also change the third part of the form to allow for different gift-giving limits, as well as to explicitly state that absent a grant of gift-giving power in this section, attorneys-in-fact are NOT granted the power to make gifts to the attorney-in-fact or anyone the attorney-in-fact is legally obligated to support. The new form will also limit an attorney-in-fact’s gift-giving power (when explicitly granted) to the annual gift tax exclusion amount in effect in that year. These gift-giving changes only apply to SSF POA’s executed on or after January 1, 2014.

Finally, while a principal has always had the option to petition the court for an accounting from the attorney-in-fact, a new statutory provision clarifies that this right exists and that a petitioning principal is entitled to recover the principal’s reasonable attorneys’ fees and costs if the court finds the attorney-in-fact had a duty to render the accounting. This provision goes into effect August 1, 2013, and applies to SSF POA’s executed before, on, or after that date.

In conclusion, the changes to the SSF POA and the associated statutes will not change the essential purpose and function of the SSF POA, but it will be important to closely review a presented power of attorney to determine if it complies with the 2013 revisions or if it should be treated as a common law power of attorney.

The post Powers of Attorney- What You Need to Know About the Current Requirements and Upcoming Changes appeared first on Anastasi | Jellum.