During the estate planning process, many choose to execute a durable power of attorney, which is useful in many situations, such as when you are traveling and need someone to assist with your financial affairs, if you become ill or if you are incapacitated and your loved one needs legal guidance regarding your care.
With a valid power of attorney in place, there’s no need to go to the court for guardianship. That is why AARP New Hampshire and several partners led the charge on passing the New Hampshire Uniform Power of Attorney Act in order to make the process more user friendly and easy to navigate.
To help you understand what this new law (effective January 1, 2018) means to you, we’ve put together these frequently asked questions.
What is a financial power of attorney (POA?)
A power of attorney (POA) is a legal document in which one person, called the principal, gives the authority to make decisions with respect to the management of his or her financial affairs to another person, called the agent.
What are the advantages for Granite Staters of having a POA?
A POA allows a person to name someone to act on his or her behalf when they are unable to manage their financial affairs on their own. If a person who becomes unable to handle their own affairs does not have a POA, often the only alternative is for someone to request the probate court to appoint a guardian to manage the person’s financial affairs. But establishing a court-ordered guardianship takes time and involves expense, and the court then decides who gets to manage the person’s financial affairs.
What does the new New Hampshire Uniform Power of Attorney Act (POA Act) mean for Granite Staters?
In contrast to prior New Hampshire law, the new New Hampshire Uniform Power of Attorney Act, RSA 564-E, (POA Act) provides greater guidance and protections for POAs. A major purpose of the POA Act is to reduce the serious problem of POA abuse. For example, some agents may use the principal’s money and property for their own benefit rather than the benefit of the principal. POA abuse affects many older Granite Staters, especially those who become incapacitated due to Alzheimer’s disease as well as other illnesses and conditions.
What are the legal requirements for a valid POA?
A POA must be signed by the principal or by another person in the principal’s presence and at the principal’s direction, and acknowledged by a notary public. The agent is also required to sign the POA to acknowledge that they have been appointed as agent and understand their role.
When does the POA begin and when does it end?
Once the POA has been signed by the principal and agent, it immediately goes into effect unless the principal states otherwise. The POA remains in effect until the principal dies or revokes it before death. A competent principal can revoke a POA at any time.
Who can serve as an agent?
The principal may designate any competent adult or an organization such as a bank as an agent. The agent can be either a relative or a non-relative.
What are characteristics of a good agent?
The principal should choose an agent very carefully. The ideal agent should be:
- Sufficiently knowledgeable and experienced to make needed financial decisions
- Willing to handle the responsibility
- Available now and in the future to serve as agent
- Located close to the principal
- Willing to carry out the principal’s wishes and preferences, not his or her own
- Able to manage possible conflicts among family members and others
May the principal designated co-agents and successor agents?
A principal may designate more than one person as an agent. When there are co-agents, however, difficulties in communication and conflicts between them can arise. A principal can designate a successor agent or agents to serve if the original agent declines to serve, resigns, dies, becomes incapacitated, or is not qualified to serve. Unless the POA states otherwise, a successor agent has the same authority as that given to the original agent.
What can an agent do?
The principal can give the agent very broad general powers or narrow specific powers. The principal should carefully consider what powers to give to the agent. There are certain powers that an agent can exercise only if they are expressly stated in the POA. The exercise of these powers pose a particular risk to the principal’s property and estate plan and create an increased risk of POA abuse.
These specific powers are:
- Creating, amending, revoking or terminating an inter vivos trust
- Making a gift
- Creating or changing a beneficiary designation
- Creating a right of survivorship
- Designating authority granted under a power of attorney
- Waiting the principal’s right to be a beneficiary of a joint and survivor annuity
- Exercising fiduciary powers that the principal has authority to delegate
- Exercising authority over electronic communication sent or received
- Exercising authority over intellectual property
What are an agent’s duties?
New Hampshire’s POA Act furnishes clearer guidelines than prior New Hampshire law as to the nature and extent of the agent’s duties and responsibilities. They include (but are not limited to
- Acting in accordance with the principal’s reasonable expectations to the extend known and, if unknown, in the principal’s best interest
- Acting in good faith
- Acting within the scope of authority granted in the POA
Can an agent’s misuse of authority be challenged? How? By whom?
To reduce POA abuse, the POA Act allows an agent’s actions to be challenged. The Act lists a number of persons (see below) who can request a court to review the actions of an agent if they believe the agent is misusing his or her authority. The listed persons include anyone who can demonstrate “sufficient interest in the principal’s welfare.” An agent may be held liable for losses result from violation of his or her duties and responsibilities under the Act.
- The principal
- The agent
- A guardian, conservator, or other fiduciary acting for the principal
- A person authorized to make health-care decisions for the principal
- The principal’s spouse, parent, or descendant
- A person who would take property of the principal under the laws of interstate succession if the principal were to die at the time the petition is filed, whether or not the principal has a well
- A person named as a beneficiary to receive any property, benefit, or contractual right on the principal’s death or as a beneficiary of a trust created by or for the principal that has a financial interest in the principal’s estate
- The department of justice, the department of health and human services, the county attorney, or any other governmental agency having regulatory authority to protect the welfare of the principal
Can an agent be held criminally liable for misusing a POA?
Yes. Under state law it is a crime if an agent knowingly or recklessly takes advantage of an elderly, disabled, or impaired adult for someone else’s benefit. It is also a crime if someone uses undue influence or other improper means to compel an elderly, disabled, or impaired adult to appoint them as agent under a POA.
Must a bank or other financial institution accept a POA?
The POA Act requires banks and other financial institutions (subject to a few exceptions) to accept a POA presented by an agent provided the POA has been “purportedly” acknowledged before a notary public. They may not require an additional or different POA form unless one of the exceptions applies. If banks or financial institutions refuse to honor a POA, they may be subject to a court order requiring acceptance, and they may be liable for attorney fees and costs.
Is a POA created before the POA Act became effective still valid?
A POA prepared and executed before the POA Act became effective on January 1, 2018 is still valid provided it met the requirements of New Hampshire law at the time of its execution. But a competent person who currently has a POA may replace it with a new POA that is consistent with the POA Act.
Does the POA Act apply to a health care POA?
The POA Act does not apply to health care decision making. New Hampshire RSA 137-J authorizes and governs advanced directives in which a person gives the authority to make health care decisions on his or her behalf to another person. A principal may name different persons or the same person to act as his or her agent under a financial POA and a health care POA.
Is there a form that can be used to create a POA?
The POA Act contains a form to use in the creation of a POA. But the use of this form is not required. In some situations, the use of the statutory form may be appropriate. In other situations, a customized form may be advisable. For example, a person who has farm property, a business, or other major financial assets should consider consulting a lawyer about drafting a customized form.
Because POAs provide such broad authority to agents and are subject to abuse, it is strongly advisable to consult with an attorney before executing a POA. If you are unable to afford to consult with an attorney, there are free legal services available.
Where can I get free legal help for a POA?
If you are 60 years of age or older, you can contact the Senior Law Project of New Hampshire Legal Assistance at 1 888 353 9944. You can use this link to go to the Act: