New Power of Attorney Protections for the Elderly

During the last legislative session two of the most controversial bills to come first before the Senate Health Committee and the House Judiciary Committee before introduction on the floor were SB 1050 and HB 2359.

While the most notorious media coverage, regarding these two elder law protection bills, pertained to fingerprinting and criminal background checks for owners and employees of care homes for the elderly, one of the most significant aspects of the protections, prevention of the abuse of financial powers of attorney documents, received little media coverage.

Though the applicable Arizona Revised Statutes specifically address "financial exploitation" of incapacitated and vulnerable ("VI") adults, the law prior to last year's session did not give a checklist of examples of what real life situations are covered when a perpetrator decides to take both advantage of and the money or estate of a VI adult.

New Protections

The new legislation helps fill that gap for one of the most misused legal documents in Arizona and in the nation, to wit: the power of attorney.

With thousands upon thousands of retirees from all of the country moving to Arizona, the opportunities for estranged or disgruntled family members, friends, neighbors, and other persons in positions of trust toward the VI adult, to take advantage of elderly residents, have often become numerous and, in fact, quite easy.

Once a power of attorney is signed, and the VI adult does not pay attention to what is happening to his or her estate, land, bank accounts, stocks, retirement funds, a ruthless or untrustworthy person, who is put into a position of trust by the VI adult's signing a power of attorney, can easily deplete the VI's estate or can use the VI's estate for the perpetrator's own gain.

This fact of fraud was a prime concern of the Attorney General's office, which had an interest in this bill, as well as a coalition of elder law advocates, both lay persons and attorneys, who testified for passage of a stonger protections in powers of attorney legislation.

Banks, real estate, and estate planning interests, among others, were concerned that changes to the power of attorney law would make it more difficult to transact daily business, where powers of attorney are used quite often.

Also, changes to the power of attorney law could result in civil or criminal sanctions to persons who aided an "attorney in fact" (the person who is granted the power of attorney) in performing his or her duties. In other words, what before was considered proper and doing business as usual could now be construed as improper and in derogation of the attorney in fact's/the fiduciary's duty to the VI adult.

Senator Day Convenes Advisory Group

Senator Ann Day, R-Tucson and Chair of the Senate Health Committee, created an informal advisory group, of competing views, to discuss the different views pertaining to the power of attorney legislation. Represented at the advisory meetings were designates from legislative staff offices, the Attorney General's office, hospital, real estate, and commercial community interests, as well as advocates for the elderly.

While SB 1050 received much attention from Senator Day and her committee, there was much attention given by others both within and outside the legislature to HB 2359 regarding proposed financial power of attorney legislation, including with references to the Uniform Durable Power of Attorney Act as incorporated in the Uniform Probate Code.

As amendments and debates about proposed new law often do, the competing interests, wording and versions of proposed new law was done more in committee work, and in informal advisory sessions, than in the public eye during open session. Neither time nor protocol would have it any other way.

Particulars of New Power of Attorney Law

After all of the wrangling, the Arizona 43rd Session passed the two laws, SB 1050 and HB 2359. They became effective on August 1, 1998.

These new protections now require new language in and new methods of execution of powers of attorney (POA). Also, there is greater liability for persons who act as a trusted agent pursuant to a POA. These changes doe not apply to health care directives that are validly executed.

Importantly, for attorneys who draft POA's, and for other individuals, including family members, real estate agents, or the family accountant or family banker, for example, who act upon the authority of a POA -- when they know that the person who signed the POA is vulnerable or incapacitated -- there should be added concern about the new law.

Arizona Revised Statute 13-1813 specifically states that is unlawful to use a power of attorney with the intent to unlawfully deprive the principal of his or her asset or property. Such a misuse of the power of attorney can be punished under the same classification as a theft.

The language of the new POA protections are much more detailed. They have been the subject of several legal publications and continuing legal education programs since the new laws became effective.

Suffice it to say that attorneys are changing their legal documentation to fit the new POA law and Arizona citizens and new retirees moving here, as well as potential new attorneys in fact for their relatives or friends, should also make themselves aware of the new law.

Not to do so will make the document and/or the persons drafting or implementing the POA subject to attack for invalidity or more strict sanctions for non-compliance.

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