SCUPOAA Financial Powers of Attorney Not Boilerplate Drafting Anymore, 0917 SCBJ, SC Lawyer, September 2017, #32

• Author: By Mason Salisbury, J.

SCUPOAA Financial Powers of Attorney Not Boilerplate Drafting Anymore

Vol. 29 Issue 2 Pg. 32

South Carolina BAR Journal

September, 2017

By Mason Salisbury, J.

The South Carolina Uniform Power of Attorney Act (SCUPOAA) enacted January 1, 2017, expands our financial power of attorney statute from three to 46 pages. As a result, what attorneys have done in the past must change, in some cases significantly Drafting a SCUPOAA power of attorney (Power) requires an understanding of SCUPOAA's new and powerful client options, new agent liability sections, 44 default provisions, and the 12 power areas now deemed so risky to client property each must be "expressly" stated in a Power to be granted. In short, SCUPOAA necessitates more client interaction, flexibility in drafting, and points to attorney responsibility to make it so.

Options and decisions now drive the drafting process. This article is a roadmap to SCUPOAA's option and decision provisions, matching them with drafting tips, suggestions and cautions from the SCUPOAA Comments and Uniform Power of Attorney Act (UPOAA) commentary.^[1] Unsupported observations are the author's.

SCUPOAA Sections 62-8-101 through 62-8-123

Section 102 definitions control in the statute but not in the Power. A Power definition section or stating 102 definitions apply will limit ambiguity. Use the term "agent" not "attorney-in-fact." Section 102(5)'s good "incapacity" definition includes both cognitive and "missing" types of incapacity. Consider using it in all a client's documents where "incapacity" is defined for consistency.

Default Section 104 makes all Powers "durable" (valid after principal incapacity), so including "durability" language is now unnecessary but may help in states unfamiliar with SCUPOAA. Mandatory Section 105 requires Powers be "attested" like wills so draft accordingly. Mandatory Section 106(d) gives copies of original Powers including "electronically transmitted copies" the "same effect" as originals. Including 106(d) language and citation may help with easier acceptance of copies here and in other states.

Default Section 108(a) allows clients to nominate their own conservator and guardian. Section 108 Comment states, "Typically, a principal will nominate as conservator or guardian the same individual named as agent." Consider the health care agent for guardian if different than the Power agent. There is no rule against listing successor nominees so consider the same lineup as in the Power and the health care power respectively.

Default Section 109(a) makes a Power "effective" when "executed" (as opposed to contingent on incapacity, etc.). Section 109 Comment states this is a "best" practice. Vallario agrees, cautioning an incapacity trigger may cause delay^[2] No rule prohibits "effective" status upon execution for some agents but not for others. Ask married clients if execution should trigger effectiveness for a spouse agent g with a contingency (e.g., incapacity) g required for others. Section 109(a) o (1) allows a Power to authorize “persons to determine in writing g if an effectiveness contingency has occurred thus any contingency determination mechanism may be used including those in other parts of a client's estate planning like a spouse and a physician, a private disability panel, etc. Consistency is a good thing.

Mandatory Section 109(c) states a Power must be "recorded" after a principal's "incapacity" to remain effective (regardless of it being "effective" when "executed"). Clients and agents will only know this if it is in the Power.

Mandatory Section 110(a)(1-6) are Power termination rules, with (a)(6) stating if there is no successor agent when needed a Power terminates. This is one reason to consider Section 111(b)'s provision allowing a Power to authorize an "agent" or "other person" who can name successor agents if needed. Default Section 110(b)(3) revokes a "spouse" agent's authority upon divorce or annulment ("revoked pursuant to Section 62-2-507"). Some say a separation action should trigger revocation. Vallario suggests expanding revocation to agent "relatives of the ex-spouse."^[3]

Conversely, Whitton warns divorce may facilitate Medicaid illegibility where one spouse has "a condition that will likely require long-term institutional care."^[4] Whether to expand or override 110(b)(3) is a client driven decision.

Mandatory Section 110(f) states existing powers of attorney are not revoked unless identified in the Power or it states "all other powers of attorney are revoked." Consider listing specific powers of...