Suzanne Walsh of Murtha Cullina has summarized a new Connecticut law called the Connecticut Uniform Power of Attorney Act which is a long awaited update to the State’s 1965 law on POA’s. Walsh begins,
POA’s are simply written designations of authority to someone (called an Agent in the new law). Very often, POA’s are presented to bank tellers by Agents seeking to cash a check or withdraw funds, purportedly for the person (Principal) who created the POA. It is those banks tellers who often identify Agents who are using a POA to steal from an elderly person. That means that banks are understandably cautious about accepting POA’s presented to them.
As a result, lawyers, Agents and banks sometimes argue over a bank’s refusal to honor a POA because it is “old” or the form does not satisfy the bank for any reason. That creates a Catch-22 for the agent, who is then unable to use the power at the time it is most needed, and when the principal is no longer able to sign a new POA form because she has lost the legal capacity to do so. To resolve that problem in a balanced manner, the CT UPOAA requires banks to either accept notarized POA’s or request additional documentation within 7 business days. If the bank requests additional documentation, once the agent provides it, the bank has 5 days to accept the POA, unless its refusal is based on a safe harbor, such as suspected abuse or the bank’s knowledge that the POA has been revoked. In those cases, the bank continues to be free to refuse to accept the POA, without sanction or liability.
If the bank’s refusal is not covered by a safe harbor, then the agent can obtain a court order mandating acceptance of the power of attorney, and can potentially recover reasonable attorney’s fees and costs from the bank. In this manner, the new law tries to protect both banks and the families relying on POA’s to handle an incapable person’s finances.
In addition, the new law provides that the filing of a divorce or separation action automatically revokes the designation of a now or almost former spouse in a POA, and it assumes the POA remains effective during incapacity (so it is “durable”) without any additional language. Current law requires the Principal to state that the power is durable to give it that utility. Since most people assume POA’s are all durable, their designated Agent can be left without authority just when that authority is needed under the current law. The new law fixes that problem.
Continue reading about the new law here: Connecticut’s New Power of Attorney Law
Posted by Allison Trupp, Associate Editor, Wealth Strategies Journal