Power of Attorney Law Provides New Protections

We previously discussed how the new Act for powers of attorney in Arkansas has changed the rules for how they are created and enforced.  Now we will go into more detail about the types of power of attorney used for different purposes, the language that must be used to make them enforceable, and the exceptions that can be used to refuse them under the new Act.

First, let’s compare the two types of power of attorney that are the most common: a “durable” power of attorney and a “springing” power of attorney.  A durable power of attorney continues in effect when the principal loses the ability to make decisions.  A springing power of attorney only goes into effect when something specified in it occurs, such as when the principal is found to be incapacitated by a physician or other appropriate person.

If the principal (who is giving the power to another) signs the document with the acknowledgment of a notary that the signature is genuine and is the signature of the person signing it, then it is presumed to be genuine.  In Arkansas, under the new law, every power of attorney is presumed to be a durable power of attorney unless it is specifically written into the power of attorney that it is not.

Before the new Act was passed, any person or business presented with a power of attorney could choose whether or not to accept it.  Many businesses such as banks could even require that the power of attorney be prepared on its own form.  Under the new Act, while that could still happen, the Act sets out circumstances where it could happen, but also provides safeguards and penalties to prevent unreasonable actions.

Under the new Act when a power of attorney is presented, the recipient has four options: (1) to accept the power of attorney; (2) to request a certification of the document; (3) to request the opinion of an attorney; or (4) to request an English translation if it is not in English.  These requests must be done promptly, within 7 business days of when the power of attorney is presented.  If approved, the power of attorney must be accepted within 5 days after the opinion, certification or translation is received.

The party presented with the power of attorney still has some safeguards to protect itself by refusing to accept an invalid power of attorney.  These include: (1) where the party has actual knowledge that the power of attorney has been terminated; (2) where the request for certification or opinion has been refused; (3) where the party in good faith believes that he or she should not accept the power of attorney; or (4) if the party knows that the Department of Human Services has received a complaint of some abuse of the principal by the agent named under the power of attorney or a person acting for or with the agent.

The new Act has put laws into effect that protect the principal of the power of attorney, the agent, and the parties asked to accept it.  The use of the new statutory form, along with the advice of an estate planning attorney, can make these documents much more safe and effective for the parties involved.