Powers of Attorney

The law

History & Reform

Historical use & reform of Powers of Attorney

· 11 min read

Powers of Attorney have a long history

*Powers of Attorney c*ontinue to develop

The national perspective is fluid

State level reform continues

Powers of Attorney are evolving in a global context

Powers of Attorney Have A Long History

Historical Context

An historical analysis of Powers of Attorney would likely involve discussion of concepts like:-

  • derivative powers (i.e. authority by which one person enables another to do an act for him)
  • naked or bare authorities, compared to powers coupled with an interest
  • the doctrine of uses and related statutes, dealing with disposal of interests

Detailed historical analysis of this kind is not practical.

It is sufficient to recognize that:-

  • the term “power” in the expression “Power of Attorney” draws on historical concepts, in particular the notion of derivative powers
  • the expression “Power of Attorney” captures the notion of appointment of an agent, being someone authorized to represent the principal

This explains why the law of agency is a cornerstone of the law governing Powers of Attorney.

Powers

In legal contexts, the notion of a ‘power’ arises for example, with respect to powers of appointment.

A power of appointment might facilitate:-

  • the appointment of an officeholder (such as a power to appoint a trustee in respect of a trust)
  • the distribution of income (such as a power to appoint income in respect of a trust) or director, for a trust or corporation)

There are other kinds of powers, such as a power of revocation.

A Power of Attorney might incorporate notions of a power of appointment (for example, where a protector is identified with power to appoint successor agents).

A Power of Attorney typically incorporates a power of revocation capable of being exercised by the principal.

Nonetheless, a Power of Attorney is a unique legal concept.

Brief History

Powers of Attorney have been used by legal entities to appoint another legal entity as an agent throughout history.[2]

The law pertaining to Powers of Attorney is continually being refined and developed.

In more recent years:-

Early History

There are records that are 2500 years old from Mesopotamia, evidencing the appointment of a person to handle monies for another person, reflecting the essence of a modern Power of Attorney.

From the 14th century comes the latin maxim “Qui facit per alium, facit per se” meaning, “he who acts through another, acts himself.

In 1795, George Washington granted a now famous Power of Attorney to a trusted friend before leaving Philadelphia.

Virginia, by a statute enacted in 1954, was the first state to allow a Power of Attorney to continue beyond the principal’s incapacity.[3]

Californian History

In 1976, California was the first state in America to recognize the use of Powers of Attorney for health care.

In 1994, a California Law Revision Commission Report, led to the enactment of Division 4.5 of the Probate Code.

The following extract from the 1994 report explains the intended role of the current, Division 4.5 of the Probate Code at the time it was written:

“The new law… [will] replace the incomplete and disorganized collection of power of attorney statutes currently located with the other agency rules in the Civil Code…”

“The statutes governing powers of attorney are in need of reorganization and revision.[4] Since 1979, several bills have been enacted recognizing general durable powers of attorney and durable powers of attorney for health care, providing statutory forms, specifying a procedure for enforcement of the duties of attorneys-in-fact, and making a number of other changes in the law…”

“…the piecemeal nature of the revisions over the past 12 years has resulted in a disorganized set of statutes… unclear… obscure and incomplete… [providing] little practical guidance…”

“The proposed Power of Attorney Law restructures the Power of Attorney statutes and relocates them as a new Division 4.5 of the Probate Code, starting with Section 4000”.

The new Division 4.5 of the Probate Code is complimented by Division 4.7 of the Probate Code dealing with medical Powers of Attorney.

Recent History - Six (6) Greater States

In 2006 the Uniform Law Commission released further national recommendations focusing upon durable Powers of Attorney.

In 2017 Texas made substantial changes to its legislation.

In December 2020, New York passed new laws effective 13 June 2021 dealing with Powers of Attorney, being the most recent round of substantial amendments made in any of the Six (6) Greater States.

The first recorded Power of Attorney was created in Mesopotamia around 2500 years ago, to enable a person as an agent to receive a payment due to someone else and pay the monies as directed.

Powers of Attorney have been used by generals and presidents, such as George Washington in 1795 when he granted a Power of Attorney to facilitate management of his personal affairs during a period of absence from Philadelphia.

The 2010 article Power of Attorney: Convenient Contract or Dangerous Document? by Catherine Seal is commended for further reading on the subjects of:-

The history from 1964 helps to explain why whenever we speak of durable Powers of Attorney:-

  • we are talking about a relatively new invention found only in the words of legislation
  • this makes the precise words of that legislation very important when determining what constitutes a durable Power of Attorney and how they work.

> *“…an existing principle… allows the use of a properly executed Power of Attorney in business transactions…"*

>

> Justice Henson (2010) *Texas Bankers Association v Association of Community Organizations for Reform Now (ACORN)*  303 S.W.3d 404, discussed further [here](https://wiki.powersofattorney.com/en/principal#the-principal-may-be-a-commercial-entity).

Refinement Of The Law

200 years ago, common law principles prevented a Power of Attorney from operating at a time that the principal lacked capacity.FNOTE-SEE ARTICLE

Because this was the state of the law, it was necessary for the legislature to intervene and pass legislation to overcome these common law principles, so as to permit the creation of Powers of Attorney that can operate at a time that the principal lacked capacity.

This process began in 1964, the process commenced of passing legislation in each state to overcome the common law principle that a Power of Attorney could not operate if the principal lacked capacity FNOTE-SEE ARTICLE

Had the first state in 1964 not passed such legislation and the remainder of the Six (6) Greater States not followed suit, it would still not be possible to create a durable Power of Attorney in the Six (6) Greater States.

The process by which each of the Six (6) Greater States continue to refine legislation governing Powers of Attorney for persons is continuing.

Following the 2006 publication of new recommendations by the US Commission on Uniform State Laws (“ULC”):-

  • Texas revisited its laws in 2018, passing further legislation acknowledged by the ULC as consistent with the ULC’s 2006 recommendations
  • New York revisited its laws substantially in December 2020, passing new legislation that largely became effective on 13 June 2021
  • Florida revisited its laws substantially in 2011, passing new legislation
  • Illinois revisited its laws substantially in 2011, passing new legislation
  • Pennsylvania revisited its laws substantially in 2014-2016, passing new legislation
  • California does not appear to have revisited its laws since 2006, although for example, this 2009 publication by the Trusts & Estates Section of the State Bar of California is interesting

Implications of The Refinement Process

When we talk about change in the law, it can come about in a two possible ways:-

  • where a development justifies new legislation about subject matter in respect of which there is no common law (for example, cryptocurrencies)
  • where a development involves subject matter that is the subject of existing common law (for example, Powers of Attorney)

Where the latter possibility occurs, identifying the law is complicated because the law approaches any issue by following:-

The only way to avoid this complicated process would be for governments to pass legislation that codifies the common law completely and then prescribe that legislation  to operate exclusively, without regard to the common law which is something a government might do in certain situations, not being a situation of the kind involved with Powers of Attorney, where the common law is difficult to codify in this way.

Powers Of Attorney Continue To Develop

Two major developments have occurred in the United States in the last 50 or so years, being:-

  • the introduction of durable Powers of Attorney for use by persons that may operate when the principal lacks capacity; and
  • the introduction of Medical Powers of Attorney in some US States.

Illinois Leads The Way On Recognizing Human Rights

Fundamental human rights are at stake when we consider the terms upon which a person may be entitled to delegate their affairs, being of itself a legal right.

The right ‘to exercise legal rights without limitation, other than where limitation is necessary to protect the freedoms of others or meet moral or public order objectives’ is recognized in Article 29 of the Universal Declaration of Human Rights.

There are important questions about delegated decision making schemes that inhibit an individual in any manner from structuring their affairs however they see fit.

None of the Six (6) Greater States have done what Illinois has done in its legislation, being unequivocal recognition of the importance of preserving freedom of choice in the context of Power of Attorney arrangements in §2-1 and §2-4:

"The General Assembly recognizes that each individual has the right to appoint an agent to make property, financial, personal, and health care decisions for the individual but that this right cannot be fully effective unless the principal may empower the agent to act throughout the principal’s lifetime, including during periods of disability, and have confidence that third parties will honor the agent’s authority at all times… ( §2-1)

The principal may specify in the agency the event or time when the agency will begin and terminate, the mode of revocation or amendment and the rights, powers, duties, limitations, immunities and other terms applicable to the agent and to all persons dealing with the agent, and the provisions of the agency will control notwithstanding this Act…" (§2-4)

In contrast for examplw, California identifies requirements of its legislation that are unable to be varied (see §4101).

The words “…the provisions of the agency will control notwithstanding this Act…" (in Illinois, as cited above) are presumably included to ensure that anyone creating a Power of Attorney is as free as possible to structure their Power of Attorney affairs as they wish.

The National Perspective Is Fluid

The law in all of the Six (6l Greater States relating to Powers of Attorney continues to be refined by Courts and legislation.

For example:-

  • In 2006, the most recent national code for Powers of Attorney was released by the National Conference of Commissioners on Uniform State Laws (“ULC”) and the Third Restatement of the Law of Agency was published by the American Law Institute.
  • In December 2020 New York passed legislation that defines various changes to take effect on June 13, 2021 including discontinuance of use of a statutory gifts rider, sanctions for third parties who refuse to accept a Power of Attorney and other variations (A5630).

National uniformity remains a common objective across US States, with continuing initiatives for reform being managed at federal and state level.

Some US States have largely overlooked the national code, for example:-

  • in Louisiana, Powers of Attorney are known as ‘mandates’ (§2989) and cannot be created for durable purposes
  • in Arizona and Colorado, legislation remains scant in comparison to the legislation of for example, the Six (6) Greater States

In 1993, the most recent national code for Medical Powers of Attorney was released by the National Conference of Commissioners on Uniform State Laws (“ULC”).

At present, only a handful of US States have adopted the 1993 ULC recommendations.

State Level Reform Continues

A continual process of reform is occurring at state level.

For example, Texas made a raft of changes to its laws relating to durable Powers of Attorney in 2017 and most recently, new laws were passed in New York relating to Powers of Attorney in December 2020, with changes to take effect on 13 June 2021.

Notably, both Texas and New York took up some of the ULC recommendations, that is substantial aspects of the national code.

Interestingly and unusually, Texas in 2017, included §751.003 which is intended to promote uniformity amongst states, by providing that Subtitle P which governs durable Powers of Attorney in Texas:

“is… to make uniform to the fullest extent possible, the law with respect to the subject of Subtitle P amongst states enacting these provisions.”

Powers of Attorney Are Evolving In A Global Context

Interesting global developments in the last 15 years include, for example:-

  • the United Kingdom requiring a government form to be used when creating durable Powers of Attorney since 2007; and
  • the Northern Territory of Australia, where mandatory use of a government form known as an Advance Personal Plan is with respect to commercial and non-commercial decision making in an estate planning and risk management context operates, introduced in 2013 as part of legislative changes that also prohibited use of durable Powers of Attorney.

In South Africa for example, the law is yet to recognize a durable Powers of Attorney, similar to Louisiana.