Maine has a new law governing financial powers of attorney: the Uniform Power of Attorney Act, which became effective July 2010. The new law is meant in particular to both provide more guidance to agents and to offer more protections from financial abuse perpetuated by misuse of powers of attorney (POAs).
Below please find a list of discretionary powers under the Act and a summary of the duties of an agent for a financial POA. If you already have a financial power of attorney and it conformed to the law at the time it was executed, it is still valid and does not need to be revised. If you wish to grant an agent one of the discretionary powers listed below, you should revise your POA to include them as the law now specifically excludes them unless they are listed in the POA.
Discretionary POA Powers – Must be Specifically Authorized in the POA
- Creating, amending, revoking or terminating an inter vivos trust
- Making a gift
- Creating or changing rights of survivorship
- Creating or changing a beneficiary designation
- Delegating authority granted under a POA
- Waiving the principal’s right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan
- Exercising fiduciary powers that the principal has authority to delegate
- Disclaiming property, including a power of appointment
- Exercising a right to elective share, homestead/property/family allowance
- Collecting, borrowing against, or releasing promissory notes
- Borrowing money
- Making loans
- Exercising authority to create an interest in my property in agent or in an individual to whom the agent owes a legal obligation of support
Duties of an Agent Acting under a Financial Power of Attorney
An Agent’s Role: An agent (sometimes called an attorney-in-fact), acts for the principal of the POA in regards to the principal’s financial matters. Stepping into the principal’s shoes, an agent makes spending and investment decisions for the principal. Agents can open bank accounts, deposit funds, withdraw funds, trade stocks, pay bills, cash checks, sell property, mortgage real estate – in sum, make any decisions relating to the principal’s finances, unless such actions are expressly limited in the principal’s POA or by law. Many people appoint trusted family members or close friends are agents, other appoint attorneys or accountants. Agents should be organized, financially savvy, and trustworthy. It is advisable for agents to discuss the principal’s estate plan with the principal, the principal’s attorney, or another informed individual as agents should look to estate plans for guidance when handling a principal’s finances.
Agent’s Duty: An agent is a fiduciary. Agents must act in the best interests of the principal, keeping his or her goals and wishes in mind when making any discretionary decisions. Agent’s actions are held to high standards of good faith, fair dealing and undivided loyalty to the principal.
Agent’s Liability: Agents can be held liable for actions taken as an agent. Agents are required by law to act in good faith and in accordance with the principal’s reasonable expectations, and are limited to act only within the scope of authority granted to that agent in the POA. Agents are most often found liable for gross negligence and willful misconduct.
Agent’s Oversight: The principal, certain family members, and certain interested parties may petition the court to review an agent’s actions and records. If a separate conservator or guardian is appointed, the agent also is accountable to them. As a result, agents should keep records of all of their actions.
Agent’s Records: Agents should keep careful records of all of your actions under the POA. These records enable an agent to address any questions or concerns about their actions. Records should include a checkbook register detailing each deposit and withdrawal. Annual summaries can be helpful. Keep copies of all correspondence, receipts, etc.
Agent’s Accounting: An agent should keep the principal’s accounts separate from their own or other accounts. It is important that the principal’s funds are not commingled with others.
Agent’s Compensation: Agents may be compensated, as along as compensation is not limited by the POA. The law provides for reasonable compensation, which is usually based on an agent’s hourly pay rate at their usual job. Many agents, however, are family members or close friends that do not expect to be paid. It is best to discuss this issue with the principal and to put any pay agreement in writing, including the rate of pay. Agent compensation must be reported on an agent’s income tax return; it is income.
Agent’s Gifts: An agent’s duty is to manage the principal’s assets for the principal’s benefit. We recommend having the principal make gifts, if he or she has the capacity to do so, or consulting an attorney before making any gifts. If the principal has given an agent authority, either in the POA or in writing, to make gifts for the purposes of Medicaid planning, such gifts should be made only within the scope of that authority. Otherwise, gifts should be made only if they are in the principal’s best interest, consistent with the principal’s estate plan, and as specified by the POA. Gifting makes an agent vulnerable to claims of abuse of power, and can have adverse tax and/or long term care consequences and should be done with extreme caution.
Agent Obtaining Expert Advice: An agent’s costs for obtaining legal or financial advice usually are paid for by the principal. If an agent has questions or concerns, we recommend consulting with a professional to ensure that you act properly and in the principal’s best interests. We are happy to assist agents in carrying out their duties responsibly.
Agent’s Termination: A principal can revoke a POA at any time; this should be done in writing and sent to the agent. If a separate conservator or guardian is appointed, they can revoke the POA in writing as well.
In sum, the Maine’s Uniform Power of Attorney act offers substantial guidance to agents and protections for principals. Please contact us with specific questions about the Act; nothing on this website is meant as legal advice, which varies greatly according to individual circumstances.