On December 21, 2011, Governor Kasich signed Senate Bill 117 into law. The bill became effective March 21, 2012. In addition to changes in state trust and probate laws, the bill adopts the Uniform Power of Attorney Act (UPOAA) with a few additions that are specific to Ohio. The changes are codified in Ohio Revised code section 1337.
The UPOAA is comprised of four articles. Article 1 contains general provisions and definitions relating to a power of attorney’s creation and use. Article 2 concerns the type and extent of authority granted to agents under the new law. Article 3 provides an optional statutory form of a Durable Power of Attorney. And Article 4 contains the miscellaneous provisions regarding the relationship of the UPOAA to other Ohio laws as well as pre-existing powers of attorney.
In addition to adopting UPOAA, the new Ohio power of attorney law permits a Principal (the person granting the power of attorney) to determine whether their agent can:
- Create a trust on their behalf;
- Amend or revoke an existing living trusts;
- Make gifts of property;
- Create or modify rights of survivorship in property;
- Modify beneficiary designations on all accounts, insurance policies, annuities, etc; and
- Make elections for or changes to retirement plans.
Importantly, the new law creates a duty for each agent to attempt to preserve the provisions in a principal’s estate plan. It also provides a duty for the agent to act according to the principal’s instructions or reasonable expectations, if the agent knows them. Otherwise, the agent must act according to what he or she believes is the principal’s best interest. An agent must likewise be loyal to the principal, act in good faith and do nothing beyond the authority granted in the document. Finally, the act provides mechanisms for liability for improper action or lack of action taken by an agent.
Because a financial power of attorney gives such significant, far-reaching powers, the POA designation should be made only after careful consideration. Ohio Revised Code Section 1337.18 provides a form that may be used to create a power of attorney. While Ohio law does not require the use of this form, it is important to use language that reflects current law when creating such a document. As a result, financial advisors can add value to their clients by making sure their client’s POA’s are updated to reflect the changes in the law.
While Ohio law does not require the use of this form, it is important to use language that reflects current law when creating such a document. As a result, financial advisors can add value to their clients by making sure their client’s POA’s are updated to reflect the changes in the law.
Author: Joshua D. Didion, Esq. (Josh is a member of the Wealth Planning Group of Marshall & Melhorn, LLC – Ed.)