Washington State’s New Power Of Attorney Act
By: Washington State Litigation, Business and Real Estate Law Lawyer Lisa M. Hammel
A power of attorney gives powers to another party (commonly known as an agent or attorney in fact) to act on his or her behalf. A power of attorney essentially allows the agent to step into the shoes of the principal, and perform all acts a principal could perform in his or her own right. The scope of the power of attorney may include dealing with financial matters as well as health care decisions. It can be a useful tool when the principal is unable to manage his or her own affairs for any reason, such as travelling, hospitalization, or sustaining a disability.
Washington’s prior statute relating to powers of attorney was replaced in its entirety on January 1, 2017 by a new Washington Uniform Power of Attorney Act, RCW 11.125 (hereinafter referred to as the “Act”). The Act provides several changes and additions to the previous law, with a goal to eliminate ambiguity and to provide safeguards from possible abuse by an agent under the power of attorney. Valid powers of attorney created before January 1, 2017 remain effective. However, all of those created after January 1, 2017 are subject to new requirements in order to be legally valid. Some of the key provisions of the Act include:
The power of attorney document must now be a writing that actually refers to itself, or uses the term, “power of attorney.”
The power of attorney must be signed and dated by the principal and either notarized, or witnessed by two individuals (“competent witnesses”) who are neither the principal’s home care providers, nor care providers at the principal’s long-term care facility, and who are unrelated to the principal by blood, marriage or domestic partnership. The witnesses must actually be present when the power of attorney document is signed by the principal. (Note: Powers of attorney executed prior to January 1, 2017 are expressly excepted from these formal execution requirements).
- If the principal names co-agents to act on his or her behalf, the Act now clarifies that co-agents must exercise their authority jointly, unless the document specifies that each co-agent may act independently.
- The power of attorney must now expressly state that the document is not affected by the disability of the principal, or that it becomes effective upon the disability of the principal in order for the power of attorney to be “durable” and not affected by the principal’s subsequent disability, otherwise it automatically terminates upon incapacity of the principal.
- The general authority to make gifts is now limited to the amount of the federal gift tax annual exclusion (currently, $14,000 per year to each recipient) unless otherwise stated in the document.
- The Act incorporates Washington’s existing health care provision to allow a principal to also give an agent broad authority in making health care decisions on behalf of the principal and take all actions and request any information that would otherwise be protected by the Health Insurance Portability Accountability Act.
- Whereas the prior law provided that powers of attorney granting authority to the principal’s spouse or registered domestic partner would terminate upon the dissolution of the principal’s marriage or registered domestic partnership, the new Act provides for such termination immediately upon the filing of an action to dissolve the marriage or domestic partnership.
- The Act now allows the principal to give a general grant of power (e.g. over real property) with a simple and short sentence because specific key words grant lengthy statutory powers. Because of this change, new powers of attorney might be much shorter than those previously drafted.
- The Act now allows the principal to specifically exonerate an agent from liability for his or her actions with certain limitations. Further, an agent who engages a third party (such as an attorney or CPA) is not liable for the acts of that professional.
It is important to make sure that any powers of attorney that are created now comply with the new statute; the temptation to save legal fees by “cut and pasting” from an older document or using a “stock document” from the internet will likely result in the creation of an invalid document under Washington law.
Beresford Booth PLLC (425.776.4100), www.beresfordlaw.com.
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