Pennsylvania has passed new legislation, known as Act 95 of 2014 (the "Act"), which has made significant changes to Pennsylvania's Power of Attorney statute. Most of the provisions take effect January 1, 2015, but certain provisions, including the protections for financial institutions and others asked to accept the financial power of attorney ("POA"), are already in effect.

There are great benefits to having a POA in place and easily accepted when needed. If you become incapacitated, it is much easier for your financial affairs to be handled using the POA you (the "principal") created. The alternative is to seek a guardian of your estate through the Orphans' Court, which is time consuming, expensive, and requires you to be declared incapacitated.

Under the Act, extensive provisions setting forth the agent's duties require the agent to act (i) in good faith, (ii) only within the authority the principal has given, and (iii) generally in accordance with the principal's reasonable expectations, to the extent actually known by the agent. If the principal's expectations are not known by the agent, then the agent is expected to act in the principal's best interest. Other duties are set forth in the Act, but the principal can change those by direction in the POA. In addition, authority must be clearly given to the agent in the POA for certain gifts, dealings with trusts and nonprobate property (such as beneficiary designations), and disclaiming property.

Beginning January 1, new signature requirements take effect, and the POA must be dated and signed, witnessed by two adults, and acknowledged before a notary public. Neither the agent nor the notary can be a witness. The notice provision at the beginning of the power explains its purpose and provides a warning that you may grant broad authority to your agent to give away all your property, or change its distribution at your death. Also, you are advised to consult with an attorney to make sure you understand your POA.

For those with a POA for financial matters already in place, the POA form does not have to be changed because of the Act, but you do need to be aware of how the Act may affect its use. Banks and other financial providers will be looking for the new signature requirements, notices, and acknowledgments after January 1, which may cause confusion about existing powers until everyone becomes comfortable with the new form requirements.

There are protections in the Act for financial institutions (and other third parties) that accept a POA and follow the agent's instructions. If accepted in good faith (defined in the Act as "honesty in fact"), without actual knowledge that (i) the signatures are not genuine and valid, (ii) the power is no longer in effect, or (iii) the agent is acting outside the scope of his or her authority, a financial institution may rely upon the POA without liability.

The Act provides rules and time frames for financial institutions to accept powers that are presented to them or to require certain additional information. There are valid reasons why POAs may not be accepted, but if the reason is not permitted under the Act, failure to accept the power may result in liability for monetary damages.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.