Ohio Now Uses Uniform Power of Attorney

October 30, 2012

Misc. Topics

Ohio power of attorneyA power of attorney (POA) is a legal document an individual, known as “the principal,” can use to appoint someone to act on his behalf regarding personal, financial and business matters.  A POA is typically used when an individual becomes unable to handle his or her own affairs.  When a person becomes incapacitated and has not signed a power of attorney, the probate court may appoint a guardian instead.

Since March 22, 2012 there has been a new law in place in Ohio regarding POAs.  Ohio has adopted the Uniform Power of Attorney Act (UPOAA) and its POA laws are now similar to the laws in other states.  The new law also creates changes in state trust and probate laws.  These changes are covered in Section 1337 of the Ohio Revised Code.

The new law provides that a POA is now “durable” unless the document states otherwise.  This means the power of attorney is effective even if the person who created it becomes incapacitated.  If the principal does not want this, he should say so in the original POA document.

The new POA law allows the principal to determine if the agent has certain powers. Granting a POA does not authorize these actions automatically.  The agent must specifically be granted these rights and often they are not part of the POA designation.  They include the power to:

  • Create a living trust
  • Amend or revoke an existing living trust
  • Make gifts of property
  • Create or change rights of survivorship in property
  • Designate or change beneficiary designations on bank accounts, brokerage accounts, life insurance policies, annuities and retirement accounts
  • Elect or change a retirement payment plan

It is the duty of the agent (person holding the POA) to always act in good faith and carry out the principal’s reasonable expectations if they are known to the agent.  Otherwise, the agent must act in the best interests of the principal within the scope of authority that he or she has been granted.

An agent must act with loyalty; avoid creating a conflict of interest situation that impairs the agent’s impartiality; exercise the care, competence and diligence normally required of one with POA; keep records of all financial transactions and cooperate with the person(s) who has the authority to make health care decisions for the principal.

A key focus of the UPOAA is to prevent financial elder abuse, particularly of those suffering with dementia and memory loss, and to provide a remedy when it does occur.  The law now includes a statutory form (ORC 1337.18) which may be used to create a power of attorney.  The form lists actions an agent may not take and includes a section describing the agent’s duties and responsibilities.  Ohio law does not require use of the statutory form.

When using the form, the principal need only place his or her initials on the form next to the powers to be granted. There are currently 14 categories listed.

Marilyn Maag, a certified specialist in estate planning, trust and probate law, discussed the POA’s potential liability under the new law in a recent LexisNexis online article.

In Ohio, it is also the duty of the POA  to preserve the principal’s estate plan, however, an agent is not liable to a beneficiary of the principal’s estate plan for failing to preserve the plan if the POA has acted in good faith, according to Maag.  If the agent has not breached a duty to the principal, he or she is also not responsible for a decline in property values.

An agent who exercises reasonable care, competence and diligence in his role is also not responsible for the errors, negligence or actions of persons who provided assistance to him. However, the special skills of an agent are a factor when considering liability.  An agent who violates the UPOAA is liable to the principal or his successors in interest, for damages.  He or she may also be liable if the principal has suffered a financial loss.

Ohio law now recognizes a number of individuals who may challenge the agent’s actions by filing a motion in probate court. If the principal asks that the action be dismissed, it must be dismissed.

The principal may revoke a POA by signing a written revocation and providing a copy to all banks and financial institutions where the principal has accounts.

The new law provides that a POA is effective when executed unless it specifically states otherwise.  The POA’s authority ends when the principal dies.  An agent can never act after knowing the principal has died.

If you have a power of attorney granted before March 22, 2012 it is valid as long as it met the requirements of Ohio law when it was created.  However, in view of the new law, you may want to ask an attorney to review it.

Experienced Ohio attorneys are available to help you with power of attorney issues at Slater &  Zurz LLP  by calling 1-888-534-4850 or send a message from the website: slaterzurz.com. 

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About slaterzurz

Slater & Zurz LLP is an Ohio law firm of highly experienced and respected attorneys. Over the last 40 years, we have developed a reputation for getting positive results for clients. We've been trusted with handling over 20,000 personal injury cases and our clients have received more than $120,000,000.

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