(logo) Attorneys' Title Guaranty Fund Inc.

Real Estate and Title Insurance News

Power of Attorney Act Amendments

Effective July 1, 2011, the Illinois Power of Attorney Act, 755 ILCS 45,et seq., is amended in numerous ways that may affect, among other things, signing documents at a home closing. Attorneys in Illinois should take note of the new provisions that may affect their practices. Below are several of the most important highlights.

Creating a Power of Attorney

The amended statute includes a new statutory short form (SSF) to use as a template for creating a power of attorney. One SSF exists to create a power of attorney for property while another exists to make a power of attorney for health care. A potential agent need not use the statutory form and may instead create a custom power of attorney. A custom power of attorney must strictly adhere to the following guidelines:

1. executed by the principal;

 

2. designates the agent and includes a statement of the agent's powers;

 

3. attested to by at least one witness to the principal's signature; and

 

4. acknowledged by a notary public as to the principal's signature.

Agents should note that the third and fourth requirements above did not exist under the previous version of the statute.

Not only does the new Act require witnessing of the principal's signature, but it also limits parties that may be witnesses to avoid conflicts of interest. These include attending physicians, owners and operators of health care facilities where the principal is a resident, relatives of the principal or agent, and agents or successor agents under the power of attorney.

The new SSF creates the power of attorney, but it also provides for notice to both the principal and the agent. The principal's notice is presented in an easier-to-read format than the previous single paragraph of all caps. Custom powers of attorney that do not use the SSF should still properly distinguish explanatory language from the legal paragraphs. Also, the new form includes an optional blank for a principal to initial the power of attorney to acknowledge that the principal read the document. Such initialing would be useful in the event of a challenge as additional evidence that the principal read and understood the document. Note, however, that this initialing is optional and it is not necessary for the principal to initial here for the power of attorney to take effect.

The notice to agent informs the agent of the basic requirements of the position. A careful attorney should already exercise cautious and professional behavior toward clients that would carry over to acting as an agent under a power of attorney. However, an attorney should still be aware of certain provisions of the new Act. For instance, some agents mistakenly believed that he or she only had to maintain an accounting of receipts and disbursements when a principal became incapacitated, when in fact the agent must maintain such an accounting at all times.

Revoking a Power of Attorney

Another change to the Act is that executing a new power of attorney does not automatically revoke a previous power of attorney unless the new document expressly does so. In accordance with that provision, the new SSF contains language to expressly revoke previous powers of attorney.

Because the SSF revokes previous powers of attorney, agents may prefer to use the SSF to avoid conflicting or overlapping power in multiple agents. Of course, a potential agent need not use the SSF and may create a custom power of attorney that substantially mimics the SSF. However, a drafter of such a document should be aware that the new power of attorney will not automatically revoke previous powers of attorney and may wish to copy the paragraph from the SSF that accomplishes this.

Challenging a Power of Attorney

The new Act specifies certain interested parties who have standing to challenge a power of attorney. These include: (1) the agent or principal, (2) a guardian or other fiduciary of the principal, (3) the principal's spouse, descendant, or parent, (4) "a person who would be a presumptive heir-at-law of the principal," (5) a person who will be a beneficiary by receiving property upon the principal's death, (6) a government agency concerned with elder care, and (7) the principal's caregiver or someone else sufficiently interested in the principal's welfare. Besides an action by an interested party, the Act does not foreclose the possibility that another party might make any generally available legal or equitable claim based on agent misconduct.

When a court finds that an agent engaged in misconduct, the court may grant "appropriate relief." Where the misconduct caused a loss of value in the principal's property, the court may require the agent to reimburse the lost value. Also, an agent may not use the principal's funds to defend a challenge of misconduct. Therefore, an agent should recognize the potential upfront cost of defending a legal action, even one without merit.

The new Act also specifies venue for challenging an agent's conduct. An action may be brought either in the county where the guardian was appointed or where the agent or principal live, or where the principal owns real property. In the case of immobile principals, these options for venue should make challenging an agent's misconduct more convenient for the party of lesser means.

Conclusion

The new power of attorney amendments are not revolutionary, but contain numerous tweaks intended to increase the understanding of both principals and agents as to their liabilities and duties. Potential agents should take seriously the new notice requirements and custom powers of attorney should contain clear, designated language indicating which sections are explanatory and which have legal effect. Agents should be sure to follow the requirements to create a proper power of attorney, including the provisions for witnessing (by eligible parties) and notarization. Finally, any agent should use the utmost professional care in handling a principal's assets and should be ready to provide a full explanation and accounting of the agent's actions at any time, regardless of the principal's mental or physical state.

THE TRUSTED ADVISER is published by Attorneys’ Title Guaranty Fund, Inc., P.O. Box 9136, Champaign, IL 61826-9136. Inquiries may be made directly to Mary Beth McCarthy, Corporate Communications Manager. ATG®, ATG® plus logo, are marks of Attorneys’ Title Guaranty Fund, Inc. and are registered in the U.S. Patent and Trademark Office. The contents of the The Trusted Adviser © Attorneys' Title Guaranty Fund, Inc.

[Last update: 3-14-11]