Georgia Legislature Changes Rules for Powers of Attorney
By Ed Enoch
The Georgia legislature generally ends its session in late March or early April. Laws passed by the legislature usually take effect on July 1 of the year passed. This year the legislature passed a new law concerning financial powers of attorney that affects all Georgians.
People frequently misunderstand powers of attorney. As part of all estate planning packages we do at our firm, we include both financial and health care powers of attorney. These documents give someone else the right to make decisions for you, generally when you cannot make the decisions — maybe you are out of the country or incapacitated in some way.
Financial powers of attorney have been problematic in Georgia because they were very easy to revoke. Third-parties such as banks, brokerage houses or attorneys closing real estate transactions were wary of relying on general powers of attorney out of fear of liability if the agent went beyond his powers or acted after the person granting the power of attorney revoked it. I have known numerous situations where warring family members drag an elderly relative to different attorneys to get conflicting powers of attorney granted.
The new power of attorney statute addresses a number of these weaknesses. It provides protection for third-parties who reasonably rely on the document presented. That is good news for the banks, etc. On the flip side, those entities — banks, brokerage houses, and others — will no longer be allowed to require use of their own internally generated power of attorney form when presented with a properly executed power of attorney under the new statute.
Third-parties have a limited time to evaluate and honor or question the new power of attorney form. If they do not follow these new rules, they can be subject to paying the attorney’s fees of the person whose power of attorney they rejected. This is good news for anyone who has ever tried to deal with a bank or brokerage company on behalf of an elderly relative.
Even if you have a current valid financial power of attorney, go back to your estate planning attorney to discuss whether to update to the new form. There may be significant advantage to using the new statutory form.