What is a Power of Attorney?
A Power of Attorney authorizes one or more trusted individuals to manage your financial affairs on your behalf, helping to avoid the expense and delay of court-appointed guardianship proceedings.
The principal is the individual who executes the Power of Attorney and grants authority to another person. The agent, also known as the attorney-in-fact, is the trusted individual appointed by the principal to manage financial matters and act on the principal’s behalf within the authority granted in the document.
Should I Replace My Durable Power of Attorney With a Statutory Power of Attorney?
On November 1, 2021, Oklahoma adopted the Uniform Statutory Power of Attorney Act (“Act”). Before November 1, 2021, an Oklahoma Power of Attorney document was commonly referred to as a Durable Power of Attorney. An Oklahoma Power of Attorney executed under the current Act is commonly referred to as Statutory Power of Attorney. If you executed a valid Durable Power of Attorney before November 1, 2021, your document did not become invalid when the new law took effect. However, there are a couple important reasons why you should consider updating your estate plan to include a Statutory Power of Attorney.
Does a Statutory Power of Attorney Work Across State Lines?
The Act has been adopted by more than half of the states. Its purpose is to promote greater consistency in the recognition and enforcement of Statutory Power of Attorney across state lines. If you frequently travel, own property in another state, or anticipate moving to another state that adopted the Act, having a Statutory Power of Attorney prepared under the Act may provide greater certainty that your agent’s authority will be recognized when needed.
Does a Statutory Power of Attorney Provide Greater Protections?
Perhaps the most significant change under the new Act is that it places greater limits on a financial institution’s ability to refuse a valid Power of Attorney. Under the prior law, financial institutions and other third parties were not required by statute to accept a valid Durable Power of Attorney, which often resulted in institutions rejecting otherwise valid documents or requiring individuals to complete the institution’s own proprietary forms. If a financial institution improperly refused to honor a Durable Power of Attorney, there was no statutory remedy requiring acceptance or allowing the agent to recover attorney fees.
The Act changed this by requiring financial institutions to generally accept a properly executed and acknowledged valid Statutory Power of Attorney unless a specific statutory exception applies. A financial institution may refuse acceptance if, for example, it knows the principal has died, believes the document is invalid or the agent lacks authority, suspects abuse or financial exploitation, or believes acceptance would violate federal law. However, a financial institution may not reject a valid Statutory Power of Attorney simply because it prefers its own form or has a policy against accepting outside documents. If a refusal is improper, a court may order the institution to accept the document and may award the agent reasonable attorney fees and costs.
Accordingly, individuals who executed Durable Powers of Attorney before November 1, 2021, should consider updating their documents to benefit from the protections available under Oklahoma’s current law.
What Happens If I Don’t Have a Power of Attorney?
If an individual does not have a valid Power of Attorney (Statutory or Durable) in place, their loved ones may be required to pursue court-supervised guardianship proceedings in order to obtain authority to make decisions on behalf of their incapacitated family member. For more information about adult guardianship, please see our article, “What Happens to Me and My Property if I Can’t Make Decisions? Understanding Adult Guardianship.”
When Does a Statutory Power of Attorney Become Effective?
A Power of Attorney (both statutory and durable) is often effective immediately upon execution, allowing the agent to assist the principal with financial matters even when the principal remains capable of making their own decisions. This can be especially beneficial in situations where the principal needs assistance but has not been determined to be incapacitated. For example, a principal may be hospitalized, recovering from an illness, traveling, or temporarily unable to complete financial tasks in person while still retaining the ability to make informed decisions. In these circumstances, a trusted agent can step in and handle necessary transactions on the principal’s behalf without delay.
Additionally, obtaining formal documentation of incapacity, such as a physician’s letter, may take weeks or even months. An immediately effective Power of Attorney helps avoid unnecessary delays and allows the agent to efficiently manage the principal’s financial affairs when assistance is needed, without the added burden of navigating lengthy legal or administrative procedures.
Conclusion
If your Durable Power of Attorney was executed before November 1, 2021, or if you have never prepared a Statutory Power of Attorney, now is an excellent time to review your estate plan. An updated Statutory Power of Attorney can provide peace of mind for you and your loved ones by ensuring that someone you trust will be able to manage your financial affairs without unnecessary delay or court intervention.
If you would like to discuss your estate planning goals, please contact Riseling & Rhodes, P.C. to schedule a meeting with one of our attorneys. You may call our office directly or submit a meeting request through our website, and our team will be happy to assist you.
