Northwest Washington Estate Planning Council Meeting March 18, 2020 - PDF document

Northwest Washington Estate Planning Council Meeting March 18, 2020 Fiduciary Responsibilities under Washington’s Power of Attorney Act By: Sheila C. Ridgway, Ridgway Law Group, P.S. Effective January 1, 2017, Washington adopted a version of the Uniform Power of Attorney Act (UPOAA), codified as RCW 11.125, which repealed the prior power of attorney statute, RCW 11.94, in its entirety. As of 2019, 26 states have adopted some form of the UPOAA with legislation pending in three other states and the District of Columbia. Washington’s Power of Attorney Act (“the Act”) differs in key areas from the prior power of attorney statute. Some of the ways in which the Act differs from the prior power of attorney statute include new formalities required to create a power of attorney, formal methods to determine incapacity, new duties and limitations on an agent’s authority, new provisions pertaining to resignation by the agent, new provisions relating to the termination of the power of attorney and new provisions relating to the obligations of third parties to accept a power of attorney. The Act applies to all powers of attorney, including those executed prior to the effective date January 1, 2017. RCW 11.125.030. A. Formalities required for creation of valid PO A Under the prior statute, a power of attorney needed only be in a writing signed by the principal. Under the new Act, a power of attorney must be in a writing that refers to itself or uses the term power of attorney. It must be signed and dated by principal and acknowledged before a notary public or other individual authorized by law to take acknowledgments, or attested by two or more competent witnesses. In order to be “competent”, the witness cannot be home care providers for the principal, care providers at an adult family home or long-term care facility in which the principal resides. The witnesses also cannot be related to the principal or to the agent by blood, marriage, or state registered domestic partnership. The witnesses must be present when the power of attorney is signed by the principal. RCW 11.125.050(1). A notarized power of attorney is presumed to be valid. RCW 11.125.050(3). Powers of attorney executed prior to effectiveness date of the Act or that would be effective in the state in which the POA was executed will remain valid. RCW 11.125.00. B. Effectiveness of Power of Attorney Under the new Act, a power of attorney becomes effective when executed unless it contains language that it becomes effective at a future date or on the occurrence of a future event or

contingency has occurred, such as incapacity. A power of attorney may authorize one or more persons to determine in a writing that the event or contingency has occurred. RCW 11.125.090. The Act also grants authority to the authorized person to obtain the principal’s medical records and communicate with the principal’s health care provider in order to make capacity determinations. Under the new Act, the incapacity is defined as the inability of an individual to manage property, business, personal, or health care affairs because the individual: (a) has an impairment in the ability to receive and evaluate information or make or communicate decisions even with the use of technological assistance; or (b) is: (i) an absentee, as defined in chapter 11.80 RCW; or (ii) outside the United States and unable to return. If the power of attorney becomes effective upon incapacity and the principal has not authorized a person to determine whether the principal is incapacitated or the person authorized is unable or unwilling to make the determination, the new Act provides two methods to determine incapacity. First, a determination of incapacity can be made in writing by a physician or psychologist who personally examines the principal. Second, a determination of incapacity can be made by a judge or other government official. RCW 11.125.090 This is a change from the prior power of attorney statutes, which did not specifically provide when a continent power of attorney became effective but only provided that “persons shall place reasonable reliance on any determination of disability or incompetence as provided in the instrument that specifies the time and the circumstances under which the power of attorney document becomes effective.” RCW 11.94.010(2). C. Durability of the Power of Attorney Under the UPOAA, there is a presumption that a power of attorney is durable. However, under Washington’s version of the Act, a power of attorney is assumed to terminate when the principal is incapacitated, so it is not assumed to be durable unless specific language in the document expressly provides that it survives the incapacity of the principal. This is true whether the power of attorney was created before or after the effectiveness of the Act. As a result, a power of attorney executed in Washington prior to January 1, 2017 or executed in another state does not have durability language, it will terminate if the principal becomes incapacitated. Because the Act defines incapacity to include both disability and physical absence, a power of attorney containing the requisite durability language may authorize the agent to act not only when the principal is incapacitated but also when the principal's whereabouts are not known, or it is not known whether the principal is still alive.

D. Acceptance of a Power of Attorney A third party accepting an acknowledged (i.e. notarized) power of attorney in good faith may rely on the presumption that the power of attorney is valid and that the agent is acting within the scope of the agent’s authority. RCW 11.125.190. The Act also contains a safeguard protecting a third party from someone using an invalid power of attorney by asking the agent to certify the power of attorney's validity. The certification must state: ( a) The person presenting himself or herself as the agent and signing the affidavit or declaration is the person so named in the power of attorney; (b) If the agent is named in the power of attorney as a successor agent, the circumstances or conditions stated in the power of attorney that would cause that person to become the acting agent have occurred; (c) To the best of the agent's knowledge, the principal is still alive; (d) To the best of the agent's knowledge, at the time the power of attorney was signed, the principal was competent to execute the document and was not under undue influence to sign the document; (e) All events necessary to making the power of attorney effective have occurred; (f) The agent does not have actual knowledge of the revocation, termination, limitation, or modification of the power of attorney or of the agent's authority; (g) The agent does not have actual knowledge of the existence of other circumstances that would limit, modify, revoke, or terminate the power of attorney or the agent's authority to take the proposed action; (h) If the agent was married to or in a state registered domestic partnership with the principal at the time of execution of the power of attorney, then at the time of signing the affidavit or declaration, the marriage or state registered domestic partnership of the principal and the agent has not been dissolved or declared invalid, and no action is pending for the dissolution of the marriage or domestic partnership or for legal separation; and (i) The agent is acting in good faith pursuant to the authority given under the power of attorney.