Georgia law governing powers of attorney changed substantially on July 1, 2017. Additional changes became effective on July 1, 2018. If you created your power of attorney before the changes, or if you consider creating a power of attorney now, understanding the provisions of the new Georgia Power of Attorney Act (GPOAA) is critical.
A power of attorney — often referred to simply as a POA — is a legal document in which the person executing the document, called the principal, authorizes another named individual, called the agent or attorney-in-fact, to act on the principal’s behalf. The document itself defines the extent of the agent’s authority.
The Georgia Power of Attorney Act, which governs powers of attorney in the state as of July 1, 2017, defines power of attorney as “a writing or other record that grants authority to a person to act in the place of an individual, whether or not such term is used.”
A specific provision states that the GPOAA does not apply to documents relating to the “power to make health care decisions” and several other specialized types of documents. In Georgia, the term health care directive or advance directive describes a document giving authorization over health care matters. A state statute different from the GPOAA governs health care directives.
The GPOAA does apply to most powers of attorney created by an individual that give another person authority to take actions relating to financial matters and make financial decisions on the individual’s behalf. This type of document sometimes is referred to as a financial power of attorney.
A durable power of attorney is a POA that remains in effect if the principal becomes incapacitated. The new law provides that every power of attorney governed by the statute is durable, unless the document itself expressly states that incapacity of the principal terminates the authority granted in the document.
After a person becomes incapacitated, he or she can no longer create a valid power of attorney. In the absence of a valid power of attorney created before incapacity, no one can act on behalf of the incapacitated individual. A family member will have to petition the court to create a guardianship or conservatorship authorizing someone to take actions and make financial decisions on his or her behalf.
For those reasons, most estate plans include a power of attorney. The document ensures that a trusted person can make financial and legal decisions in the event the person creating the POA becomes incapacitated and is unable to make his or her own decisions.
Among the most important provisions of the new law are those setting specific requirements for creating a valid power of attorney. The statute also includes two significant improvements from existing law. The first improvement relates to protecting principals from misuse and abuse of powers of attorney. The second change relates to third party acceptance of powers of attorney.
The new law expands the options for seeking judicial review by giving certain persons the right to petition the court to request review of the document or of conduct of an agent. The goal of this provision includes protecting incapacitated principals (who often are elders) from abuse or misuse of a power of attorney. In reviewing a POA, the court has the authority to order that the agent compensate the principal for losses caused by the misconduct, as well as require the agent to pay the attorney’s fees and costs of the principal arising from the misconduct.
Under prior law, if a third party (like a bank or other financial institution) refused to accept a valid POA, the agent faced major obstacles and had little recourse. Provisions in the GPOAA facilitate acceptance of powers of attorney that comply with the new law, provide protections for a third party who accepts a POA in good faith, and impose liability on third parties who refuse to accept a POA that complies with the requirements of the Act.
To be eligible for protection under the new third party rules, a POA must be created using a statutory form included in the GPOAA or be in a form that “substantially reflects the language” in the statutory form. The 2018 amendments clarified the meaning of this requirement and made changes in the statutory form.
This provision creates significant issues in some cases, because the statutory form does not always address a principal’s unique circumstances and needs. To avoid these issues, anyone wishing to create a new power of attorney should seek assistance from an experienced estate planning attorney to ensure that the document accurately reflects the principal’s needs and complies with all the requirements of the GPOAA.
Valid powers of attorney created before July 1, 2017, are still valid under the new law. However, they are subject to the laws in effect prior to the effective date of the GPOAA. That means those powers of attorney will not have the protections provided by the new law.
If you have an estate plan that includes a power of attorney created before July 1, 2017, when the GPOAA became effective, you should contact your estate planning attorney to discuss the need for updating it. Revising your power of attorney to comply with the new law provides protections that otherwise may not be available to you or your loved ones.
For individuals wishing to create a new power of attorney, consultation with a knowledgeable attorney is strongly advised. If you or your loved one create a POA on your own or using a DIY (Do-It-Yourself) service, the power of attorney may not be valid under the new law or may not accomplish your goals and address your needs and circumstances.
Additional information about powers of attorney is available in our article, Power of Attorney Misconceptions.
In our Cartersville estate planning practice at Asset Protection & Elder Law of Georgia, we focus on protecting our clients and their assets, whatever their unique circumstances may be. Powers of attorney are an important component of our services.
We provide estate planning services to clients throughout the communities northwest of Atlanta, including in Bartow County, Cobb County, Cherokee County, Gordon County, Floyd County and Paulding County.
Call us at (770) 382-0984 or contact us through our online form.