House Reps Propose Further POA Study

On November 2, 2007, the Pittsburgh Post-Gazette published an article by Dennis B. Roddy, entitled "Lawmaker: Tighten rules on power of attorney", which noted introduction of House Resolution 484, Printers No. 2753 (text version) regarding further study of powers of attorney, under PA's Probate, Estates & Fiduciaries Code, Title 20, of PA Consolidated Statutes.

House Resolution 484, of the 2007-2008 Session (PDF, 2 pages) would direct further formal study of powers of attorney in Pennsylvania by the Joint State Government Commission, through its Advisory Committee on Decedents' Estates Laws, with specific consideration of the changes proposed by the 2006 version of the model "Uniform Power of Attorney Act", which were suggested for the states by the National Conference of Commissioners on Uniform State Laws.

According to the Resolution's History, it was introduced by twenty-eight House co-sponsors on October 26, 2007, and was immediately referred to the House Judiciary Committee for consideration. The lead sponsor is Representative Jesse White.

HR 484 states this purpose:

A Resolution directing the Joint State Government Commission to study the Uniform Power of Attorney Act and Pennsylvania's current power of attorney statute to determine whether any amendments should be made to Pennsylvania's current statute.

This is the present text of proposed HR 484:

WHEREAS, A power of attorney is a fairly simple and inexpensive means by which an individual can provide for another person to be the individual's surrogate decision maker, especially at those times when the individual is unable to make decisions for himself; and

WHEREAS, Pennsylvania's power of attorney statute, 20 Pa.C.S. Ch. 56, was enacted in 1982; and

WHEREAS, The National Conference of Commissioners on Uniform State Laws has existed since 1892 to make recommendations regarding what laws should be uniform among the states and to prepare sample uniform acts; and

WHEREAS, Pennsylvania participates in the National Conference of Commissioners on Uniform State Laws; and

WHEREAS, The National Conference of Commissioners on Uniform State Laws promulgated the Uniform Power of Attorney Act in 2006 for consideration and enactment by the states; and

WHEREAS, The Uniform Power of Attorney Act has been enacted in one state, New Mexico, and has been introduced in four other states, Maine, Maryland, Michigan and Minnesota; and

WHEREAS, The Uniform Power of Attorney Act was promulgated after a study of the power of attorney statutes in the 50 states, which indicated that the state statutes were increasingly different from each other and that new and unforeseen issues had arisen since earlier uniform power of attorney statutes had been promulgated; and

WHEREAS, It has been approximately ten years since the Joint State Government Commission last reviewed Pennsylvania's power of attorney statute and recommended amendments; therefore be it

RESOLVED, That the House of Representatives direct the Joint State Government Commission to have its Advisory Committee on Decedents' Estates Laws study the Uniform Power of Attorney Act and Pennsylvania's current power of attorney statute to determine whether any amendments should be made to Pennsylvania's current statute; and be it further

RESOLVED, That the Joint State Government Commission report its recommendations to the House of Representatives within 18 months of the adoption of this resolution.

The article by Denny Roddy provided further background and some commentary about HR 484 [links added].

A freshman member of the state House this week introduced a resolution to begin to study ways to tighten the laws governing powers of attorney, which grant individuals wide-ranging powers over the financial affairs of others.

Jesse White, D-Cecil, said he decided to seek the study and possible changes in the law after a series of articles in the Pittsburgh Post-Gazette earlier this year described instances in which persons holding such powers changed retirement beneficiaries, wrote checks to political campaigns and emptied bank accounts of ill, elderly and dying individuals.

"It kind of opened my eyes to realize this is more of a systemic problem that can be corrected," Mr. White said after introducing the resolution before the state House.

An attorney in private practice, he said he has encountered clients who request POAs and seem unaware of the immense powers such a document confers.

In Pennsylvania, the Post-Gazette found, some broad-ranging authorities in the laws governing POAs allow agents -- the persons entrusted to handle another's affairs -- to make sweeping changes in beneficiaries on insurance policies, to take out insurance policies and to change beneficiaries on pensions and other retirement accounts.

"There's very little outside accountability. By the time everyone knows what's going on, the money can be long gone," Mr. White said.

The resolution would direct the Joint State Government Commission -- a body created by the Legislature -- to conduct a study and recommend changes in the current law and report its recommendations to the Legislature within 18 months.

The resolution was welcomed by one member of the commission subcommittee that reviews laws on the elderly and estates. Neil Hendershot, a Harrisburg lawyer and member of the commission's advisory committee on estate law, said he was pleased at the renewed focus on POA laws, which were last revised in 1999.

At the time, the committee, headed by Philadelphia attorney John Lombard, the co-author of a text on power of attorney law, closed a gaping loophole that once allowed agents to make unlimited gifts, even to themselves, from the savings of persons who had appointed them as POA.

But the committee did not tighten the language on insurance and retirement accounts, opening the door, Mr. Hendershot said, for potential abuse.

Some of Mr. White's work might already have been accomplished unbeknownst to him.

After the publication of a three-day series on POA abuse this summer, Mr. Lombard reconvened the elder and estates committee, which put together a report suggesting tightened regulations on sections of the state's Durable Power of Attorney Act that govern insurance and retirement benefits.

Mr. White said he believes the resolution for a study is likely to find a warm reception in the House.

Because it was introduced as a resolution, it does not require Senate concurrence.

"I've gotten calls of support from both sides of the aisle," he said.

The Post-Gazette articles mentioned above were highlighted previously on this Blog; and the last of those articles in the series was reproduced in full. See: PA EE&F Law Blog postings, "Powers of Attorney" Investigated in Series (09/04/07); and Final "Courting Trouble" Article on POA Abuse (09/05/07).

As noted in the article, some changes to Chapter 56 had already been proposed, as announced the week before HR 484 was introduced. JSGC-ACDEC set forth two proposed changes to Chapter 56 in its Report issued October 17, 2007 (posted here on the JSGC website on October 22, 2007). See: PA EE&F Law Blog posting, "PA PEF Code Revisions Proposed" (10/25/07).

The changes proposed in that Report, however, relate only to designations of insurance and retirement plan beneficiaries by an agent acting under a POA. The drafting of such changes had been in the making a few months prior to the publication of the articles by the Post-Gazette; but now they should have greater legislative support, and even urgency.

The additional issues requested by HR 484 to be addressed are those mentioned in my prior posting entitled "Super Powers" Under Examination (06/05/07). In that posting, I had reflected on an article which appeared on June 4, 2007, in Forbes Magazine entitled "Taming the Superpower", by Ashlea Ebeling.

Acknowledging the growing problem of POA abuse, and noting the significant modifications adopted in NCCUSL's 2006 version of a model Uniform Power of Attorney Act regarding review & enforcement, I had asked this question:

Will we, in Pennsylvania, follow the full proposal offered most recently by the National Conference of Commissioners on Uniform State Laws, as mentioned in the article?

That proposal is the Uniform Power of Attorney Act (2006), approved by NCCUSL on July 13, 2006, described in a News Release entitled "New Act Updates the Rules on Powers of Attorney"

If HR 484, would be approved by the House, then a thoughtful answer to my question would be carefully considered by the JSGC-ACDEL for presentation to the House.