Changes to Form of Statutory Durable Power of Attorney, Effective January 1, 2014
By Jack Gannon
The Texas form of Statutory Durable Power of Attorney was recently modified when House Bill 2918 passed on June 14, 2013 became effective January 1, 2014. The Bill amended and restated Sections 752.002 and 752.051 of the Texas Estates Code, thereby altering substantial portions of the form of Statutory Durable Power of Attorney frequently used by legal practitioners in Texas. The new form is not exclusive, and other forms may be used. A copy of the new form is available here. The most notable changes include (1) a switch from the “opt-out” approach to the “opt-in” approach with respect to the powers being granted to the agent, (2) a substantial notice to the agent regarding the agent’s duties, authority, and potential liability, and (3) a brief notice to the principal regarding the selection of an agent and the duration of the agent’s authority. The new statutory form is found in Section 752.051 of the Texas Estates Code.
The new statutory form takes the “opt-in” approach, as opposed to the “opt-out” approach, with respect to the powers being conferred to the agent. Unlike its predecessor form, which required that the principal strike any powers that should be withheld from the agent, the new statutory form requires that the principal initialed next to each power it desires to grant to the agent. Any power that the principal fails to initial will not be granted to the agent, so the principal should ensure that all of the powers he or she wishes to convey are initialed. One benefit of the “opt-in” approach compared to the “opt-out” approach is that, because each power must be affirmatively initiated, accidental or inadvertent conveyances of power should be more difficult. Conversely, the “opt-in” approach may be more susceptible to fraud than its predecessor because forging someone else’s initials is arguably easier than removing a strike mark.
The new form, unlike the old form, does not grant a general power of attorney (i.e., the power to perform any act that the principal could have performed if present) to the agent. Under the old form, if none of the powers were struck by the principal, a general power of attorney was expressly granted to the agent. The new statutory form, on the other hand, contains an “all of the above” option next to which the principal may initial, but this “all of the above” option is not equivalent to a general power of attorney. If the principal desires to convey a general power of attorney, language to that effect will need to be added to the form.
The new statutory form also includes a substantial notice to the agent. This notice includes language related to the agent’s role as a fiduciary, the agent’s duties, the duration of the agent’s authority, and the agent’s potential liability. The notice states that, by accepting the authority granted under the power of attorney, the agent establishes a “fiduciary” relationship with a principal. This relationship imposes specific legal duties on the agent, such as the duties to act in good faith, to refrain from acting beyond the agent’s express authority, to act loyally, to avoid conflicts, and to disclose the agent’s identity as an agent. The notice enumerates additional duties of the agent, as required under the Texas Estates Code, including maintaining certain records and providing an accounting if requested by the principal. Further, the notice indicates that the agent’s authority terminates upon the principal’s death, revocation of the power of attorney, divorce or annulment (if the agent and principal are married), appointment of a permanent guardian of the principal’s estate, or the issuance of a court order suspending the agent’s power. The notice also indicates that the agent may be liable for damages caused by a violation of the Durable Power of Attorney Act or subject to prosecution for misapplication of property under Chapter 32 of the Texas Penal Code.
The new statutory form also includes a brief notice informing the principal that he or she should select someone that he or she trusts to serve as agent. Further, the notice informs the principal that the agent’s authority will continue until the principal dies or revokes the power of attorney, the agent resigns or is unable to act for the principal, or a guardian is appointed for the principal’s estate.