Reed: Statutory durable powers of attorney created prior to 2017: Replace or not?

Sandra W. Reed
Special to the Reporter
Sandra Reed

In 2010, Henry created a power of attorney naming his son, Jeremy, as his agent. Henry read an article stating that the Texas Legislature had made significant changes to powers of attorney taking effect Sept. 1, 2017. Henry wants to know if he should execute a new power of attorney based upon that.

New powers of attorney and hot topics

The power of attorney addressed here is a Statutory Durable Power of Attorney (SDPOA) as established by the Texas Estates Code §751.001, et seq. In general, the SDPOA gives an agent authority to manage the financial affairs of the principal when the principal is no longer able to do so.

Revisions to the code allow the principal the option to give powers to the agent that were not previously available under the prior statute. These so-called “hot powers” give the agent authority to make substantial changes to the prior choices that the principal has made regarding his or her property.

For instance, an agent under a SDPOA executed after Sept. 1, 2017, may be given the power to create, amend or revoke a trust that the principal had previously established. The agent may be afforded the power to make gifts to anyone, including to himself or herself. Similarly, the agent may be empowered to change the designee of a right of survivorship or a pay-on-death provision favoring to someone the agent choses. That right might even be given to the agent. If the principal holds a power of appointment —  meaning he or she can appoint someone to receive a right under a trust or other legal instrument — the agent may be given the right to exercise that power of appointment. The agent may even be given authority to delegate the powers the principal has given him or her to another person of the agent’s choosing.

Reasons to replace a SDPOA created prior to Sept. 1, 2017

One reason to replace the SDPOA created prior to Sept. 1, 2017, is that use of the older form may cause a delay in a financial institution’s acceptance of its validity. If the SDPOA adheres to the current statutory form, the financial institution will generally accept it immediately. If the form is in any other form, the firm may seek internal legal review before acceptance.

Another reason to replace the SDPOA is the identification of circumstances that suggest granting these “hot powers” would be beneficial to the principal. Making the decision as to whether and which powers are granted to the agent should be discussed in detail with an attorney knowledgeable in the area who can advise whether it is desirable to do so.

Sandra W. Reed practices Elder Law in Somervell County, handling probating of estates, drafting of wills, trusts, powers of attorney and deeds as well as estate and Medicaid planning. She lives on beautiful Chalk Mountain and can be reached at (254) 797-0211; (817) 946-2809 or at sreed@kbzlaw.com.