Due to medical advances, people are living longer than ever. In fact, the fastest growing segment of the U.S. population are folks over the age of 65. With increased age often comes the increased likelihood that someone will suffer some sort of disability or incapacity. It is important to plan for this possibility, and a good tool is the durable power of attorney. Fortunately, Virginia has recently taken an important step in passing into law the Virginia Uniform Power of Attorney Act (UPOAA). So, what does the UPOAA do and why is it important to me?
Let’s start with a basic overview. The person creating the power of attorney (called the “principal") appoints an “agent" who will have legal authority to act with third parties on the principal’s behalf. These third parties often include banks, financial institutions, creditors, the IRS, etc. In the event that the principal is unable to act with respect to these types of third-party relationships, the appointed agent “steps in the shoes" of the principal and can get things done on his or her behalf. This type of principal/agent relationship is particularly helpful if the principal has become incapacitated and lacks the legal competence to handle legal transactions on his or her own.
In July of 2010, the Virginia General Assembly enacted Virginia’s version of the Uniform Power of Attorney Act. Why did we need this? Prior to the UPOAA’s enactment, the laws governing the creation and enforceability of powers of attorney were spread out among dozens of statutes in various titles of the Virginia code and in case opinions written by judges. These various laws and opinions were not always consistent with one another, nor did they provide answers to all of the legal questions surrounding powers of attorney. The UPOAA consolidates all of the laws relating to powers of attorney into one section of the Virginia Code, and it does a good job at codifying prior case law and lawyers’ best practices over the years.
One of the best things about the UPOAA is a principal’s ability to incorporate by reference specific statutes granting the agent powers. These statutes (which will be moved to new title 64.2 of the Virginia Code in October 2012) include:
- § 26-98 (Real Property)
- § 26-99 (Tangible Personal Property)
- § 26-100 (Stocks and Bonds)
- § 26-101 (Commodities and Options)
- § 26-102 (Banks and Other Financial Institutions)
- § 26-103 (Operation of an Entity or Business)
- § 26-104 (Insurance and Annuities)
- § 26-105 (Estates, Trusts, and Other Beneficial Interests)
- § 26-106 (Claims and Litigation)
- § 26-107 (Personal and Family Maintenance)
- § 26-108 (Benefits from Governmental Programs or Civil or Military Service)
- § 26-109 (Retirement Plans)
- § 26-110 (Taxes)
- § 26-111 (Customary Gifts)
So, with the UPOAA, your power of attorney document does not need to run on for dozens of pages. You may simply incorporate some or all of the statutes above by reference. Perhaps even better, you may simply say, “I grant my agent authority to do all acts that I could do as set forth and defined by the Uniform Power of Attorney Act" (or words to that effect). Saying just this will legally authorize your agent to act on your behalf with respect to all of the transactions above.
It is important to note, however, that there are certain powers that a principal must expressly grant to his or her agent for them to be effective. These so-called “hot powers" include:
- Creating, amending, revoking, or terminating an inter vivos (living) trust
- Making a gift greater than that which is customary
- Creating or changing rights of survivorship
- Creating or changing a beneficiary designation
- Delegating authority granted under the power of attorney itself
- Waiving the principal’s right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan
- Exercising fiduciary powers that the principal has authority to delegate
In conclusion, the UPOAA has done a nice job at consolidating these laws into one place and providing a streamlined way for people to create powers of attorney. Hopefully, with this new act, we will see an increase in the number of powers of attorney being created. If you would like help putting together a power of attorney, or would like to learn more, please give us a call at 804-286-1054 or email us at email@example.com. Thanks for reading!